From FT Alphaville:
What caused the 1973 price in oil prices? The Opec embargo?
Wrong, according to SocGen’s Dylan Grice — who reckons it was merely the trigger. The cause was actually structural: a rapid surge in the import needs of the USA:
The 1970s bull market in energy wasn’t caused by the OPEC embargo but by the strain of the market’s largest consumer suddenly and permanently increasing its dependency on the oil available for export. The implication is that had OPEC not embargoed oil during the Yom Kippur war, real oil prices would eventually have risen anyway because underlying conditions required it.So why the revisionist history lesson? Well, Dylan says there could be a parallel — the grain market and its largest consumer, China...
...But as Dylan notes food inflation also had a dark side.
“Hunger eats civilization” says Marjane Saatrapi, author of the beautiful book Persepolis. Food inflation has a dark history. It has been said that the 70s food crisis contributed to the Iranian revolution. We know the Russian Revolution started with starving workers protesting high bread prices. The Parisian riots of 1789 following the devastated crop of 1788 snowballed into the French Revolution and the revolutionary fervour which swept Europe in 1848 followed a sequence of bad harvests.All of which brings the Potash Corporation into sharp focus....MORE