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World Crisis scenarios for the 21st century – Peak Oil. (update 9)

Posted by Adrian on March 17, 2008

World Crisis scenarios for the 21st century – Peak Oil. (update 9)

It can be argued that the current bull market with commodities could be solely down to the declining USD dollar, inflation, and investors looking to hedge against continuing losses of anything related to the debt markets. Tied into the commodity bull run, is the scarcity aspect with world rice, sugar and other food (commodity) stockpiles declining. Gold which has now reached the $1000.00USD mark with Silver trailing ( cheap, with no obvious future corrections). But oil could be in a league of it’s own. Investors are currently seeing oil has a inflation hedge, some analysts say a correction is eminent, that oil could fall down to $70.00 a barrel. But with emerging economies still charging on, namely China. The demand for oil is going to increase and hence the price. In that sense oil stands alone in someways as a runaway inflation contributor (not only a hedge against inflation from an investor perspective, but also a global contributor to inflation), oil/fuel is needed to transport, set up and establish all industries including food production and utilities etc.

So with price inflation already on food (global food stockpiles declining), oil will also continue to add to the costs of food and food transport.

If there is a massive and deep global recession or depression, there maybe a decline in the oil price. But with demand and shortages continuing with oil, the $100+ range could be constant.

With the huge problems forming in the world markets, oil could be that nail in the coffin for global economies.

The high oil price and countries stockpiling oil (refer to MarketWatch article on Chinese reserves adding to high oil costs), could be another indicator that Peak Oil could become a consensus backed reality.

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