Give and Take

Commodities prices are still running. As their prices increase and remain at relatively high levels over longer periods of times, the costs of production increase for many companies. Companies are then forced to raise prices. Goods then cost more and employees demand more pay. The inflationary cycle is then underway. This is what the Federal Reserve is afraid of......and I guess there is good reason why if we pull up this chart:

The instant standout for me is Natural Ga . Almost $15.......per BTU. When we chose natural gas as our national heating infrastructure it was around $2... Abundant natural gas is still available in the world, but it is becoming clearer that we need to adopt some of the alternative methods of importing. Liquefied Natural Gas, LNG, is looking to be crucial here and I think we will see some policy iniatives along this line over the coming six to eight months.

My biggest question though - is at what point do slower growth and rising commodities prices balance each other out? I am a firm believer - that we are our own solution to the energy problem at least in the short term. If our economic growth slows so that we do not demand as much energy that should help to slow or stop the price ries and give us some breathig room. The problem here though is we are entering the highest seasonal demand of the year for natural gas (October - April).....

Regards,

BG