Notes

The Twin Menaces of Inflation
This week, a storm of bad news gave markets cold feet, resulting in Friday's 250-point loss. While this pattern of volatility has been the status quo for stock exchanges worldwide for the higher part of the year-to-date, another factor has caused at least as many difficulties for a much bigger percentage of the global population: the recent skyrocketing prices in energy and food. Wheat and other cereal prices have significantly more than doubled this year, causing widespread effects ranging from speculative overbuying, which exacerbates the issue, to food riots in lots of poor countries. Millions of children all over the world are likely to suffer from malnutrition in coming years if prices stay at or near current levels, in accordance with International Monetary Fund (IMF) estimates.

Part of this unfavorable price increase has been due to shifting ideas about energy consumption and the press towards the use of alternative resources of fuel apart from gasoline: namely, the subsidies issued by many governments of developed countries to change over to ethanol along with other plant-based hydrocarbons, such as for example that made from palm oil (a particularly environmentally destructive process for ecosystems). Since these subsidies and programs have already been introduced, farmers are often able to make better returns by selling their crops to biodiesel companies than to food companies. Until How to Choose a Web Developer change, the supply end is unlikely to provide solutions. For many of these farmers, these developments mean they are able to create a decent living for the first time in years, and they desperately want to (even if it results in local food shortages sometimes).

While this widespread problem affects consumers around the globe, these micro effects are just 1 / 2 of the story for gas-sensitive American consumers. Energy prices took headlines this year due to speculation and supply concerns from OPEC and South American countries after hitting the psychologically important $100 a barrel mark for the first time in the third quarter of 2007. Crude prices remain stubbornly above historical trends, even as suppliers contend that output do not need to increase. Analysts have also projected US gasoline prices to climb above $4 a gallon through the summer, another equally unprecedented number that could be tough pill for consumers to swallow, after the one-two punch of a national housing slump and the global market meltdown.

Should oil suppliers continue to maintain current output levels, demand is eventually likely to contract. However more info 't the only links in this chain. If oil becomes a less attractive substitute for Americans, oil companies may eventually be priced out of your market. Many have already been keeping an exceptionally low profile lately. Auto companies play an enormous part along the way, but shrinking sales and looming layoffs will probably increase the pressure towards manufacturing lower-emmission vehicles. But the single biggest mover and shaker would be the government, which has the opportunity to regulate both inflation (through the FEDs influence on mortgage interest levels) and the move towards more sustainable technologies. Another US president will have the ability to help determine how long the lone superpower continues to expose its Achilles heel, but at some time all eyes will undoubtedly be on the Federal Reserve if inflation once again rears its ugly head.

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