I knew . . . that commodity prices were still going to move up [in] 2005 . . . but the extent of the increases has been a little higher than even I had imagined. |
In addition to huge nuclear expansion in China, India and Eastern Europe, President Bush continues to promote the expansion of U.S. nuclear power -- a goal we note would help to alleviate a growing U.S. dependency on imported petroleum. Imports of crude & refined products now represent almost 60% of U.S. petroleum consumption - up from 30% in the mid-1980s. Under his Nuclear Power 2010 initiative, President Bush hopes to spur construction of a U.S. greenfield nuclear power plant by the end of the decade. |
Oil & Gas was the only sub-component to decline last month. Rising 'geopolitical risk premiums' for light crude oil - linked to recent unrest in Nigeria and international tensions over Iran's decision to resume nuclear research - were more than offset by sharply lower natural gas and propane prices - the result of exceptionally warm winter weather in key U.S. heating oil markets. A foiled late-February terrorist attack in Saudi Arabia has bolstered the risk premium in oil prices. |
The prices right now for a number of the base metals are really in uncharted territory. |
There is a shortage of zinc concentrates around the world and that shortage is constraining smelter production in China and places like South Korea and keeping supplies fairly tight. |
There is a very tight basic supply/demand balance around the world, and economic growth has been surprisingly strong so far this year. |
What I conclude from this is that we need another export outlet for our crude oil. I suggest China and Japan would be excellent outlets for some of this crude. |