Inflationary Times

Learn more about Peak Oil at Energy and Capital . Must-have resources required for economic growth such as oil, natural gas, silver, copper, coal, wood, iron ore, water, and uranium will continue increasing in price causing increasing inflation. This is fueled by strong worlwide economic growth and loose central bank monetary policy. Must-have resources make up the base of the economy, so if the price of must-have resources goes up the price of everything eventually goes up. Especially in the case of oil, natural gas, and coal. This is exactly what is happening now and will continue to happen in the coming years. Increasing demand for must-have resources along with lack of new supplies to meet this increasing demand will continue pushing up the prices of these resources.Prices of must-have resources will be bid higher and higher in the coming years due to the fact that supplies will not be sufficient enough to meet the increasing demand. The bidding wars for must-have resources will become more and more turbulent in the coming years, at least until alternatives are implemented into the world economy to replace the present must-have resources.Must-have resources are experiencing decreasing production at a time when demand continues increasing at a faster pace. I will use oil as an example since oil is the largest energy expenditure in the world. Many oil production facilities around the world have oil reserves that are very close to reaching their halfway point, Hubbert's Peak. According to Hubbert's Peak, when oil reserves reach their halfway point production slows down. The reason production slows down at the halfway point is that the oil that is still in the ground, after the halfway point is reached, is more thick and more deep making it harder to get to. This will support rising oil prices in the coming years as worldwide demand for oil continues increasing while worldwide production continues decreasing. The numbers just don't add up. There is no possible way that worldwide oil production will be able to increase enough to meet the increasing worldwide demand in the coming years. The worldwide demand for oil was about 83.5 million bpd in 2005 and worldwide oil production was about 85 million bpd in 2005. The worldwide demand for oil has been increasing about 1.5 million bpd the last 10 years. If the demand for oil continues at this pace then in 2008 the world will be using more oil than it is producing. Unless of course worldwide oil production increases 1.5 million bpd each year, which is highly unlikely since most of the large oil fields have peaked and are decreasing production every year now. I believe that worldwide oil demand will most likely be higher than worldwide oil production by the end of the decade. This will send the price of oil to stratospheric levels in the coming years, and when the price of oil goes up the price of everything goes up. All goods are transported from one place to the another requiring oil. Oil will have the most impact on increasing inflation in the coming years because oil is the largest energy expenditure in the world.There are ways to profit from this situation though. You can check out companies that will be great investments during this time of increasing inflation. I profile a different company every week at www.goldindicator.com
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