Best to get used to high food and energy prices – they’re here to stay

Thursday, August 30, 2012
By Paul Martin

“The pessimist sees difficulty in every opportunity,” Winston Churchill famously remarked, but “the optimist sees the opportunity in every difficulty.”

By Jeremy Warner
29 Aug 2012

It is worth bearing this observation in mind when analysing the apparent catastrophe of a further spike in food and oil prices. I say apparent, because there are more positive ways of looking at this phenomenon which don’t entirely fit with the present mood of declinism that has come to instruct all aspects of debate around the global economy.

On the face of it, rising oil and food prices are something very much to worry about. With many Western economies still flat on their backs and emerging markets slowing fast, the present surge could hardly have come at a worse time. Rising energy and food costs provide a further dampener at a time when the headwinds are already severe.

It seems that every time Western economies show some sign of climbing out of the mire, along comes another oil price shock to push them back in.

Meanwhile, the most severe US drought in 25 years has sent grain prices soaring, adding to the already debilitating effects on world food supply of a poor monsoon season in Asia and a bad harvest in Russia and Ukraine. In our own neck of the woods, high levels of rainfall have wrecked the annual harvest from potatoes to wheat, apples and Brussels sprouts.

Looking at the phenomenon globally, this is the third such food price shock in five years. Previous such episodes have spawned mass riots, and the last one is often cited as a major factor in the Arab spring.

The Rest…HERE

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