Published On: Fri, Jul 6th, 2018

Resource Evolution: Following World Product Prices

Recent drops in product prices may tempt one to think that it is the end of a period of volatility in commodity costs. Since the beginning of the 21st century, resource costs have undergone instances of abrupt and high-cost increases and sensitive unpredictability. However, you can hire private global resource solutions (GRS) consultants for an in-depth market survey.

Nonetheless, rumors about the end of this period are greatly blown out of proportion. Even with the recent drops in product prices, the prices are still close to the heights they reached in the year 2008 just before the financial crisis hit.

A recent research study by a particular global financial institution found that the main reason behind price resilience happens to be high supply costs. Additionally, the supply costs are on the rise for almost all resources. Despite the world being far from running out of natural resources, the research findings showed that upping supply will still be a challenge.

Zooming in a little deeper, the prices pointed to two tenacious factors. They are a tricky geology that makes resource extraction difficult and resources throughput advancements that neutralize the challenges being faced.

Energy

Looking back in time at the 20th century, fuel prices were constant or dropped throughout. However, energy costs have skyrocketed by an average of almost 250% since the early 2000s. The rising fuel costs have been as a result of huge demand from certain nations like China and increasing supply prices.

With the quality and standards of traditional oil wells diminishing, production is now switching to other sources such as deep-water oil and tar sands. Mining processes are not only challenging but also expensive.


Metals

During the 20th century, metal prices dropped. However, since 2000, prices have shot up by almost 170%. Several financial analysts and experts alike are attributing the rise to the ever-growing demand.

Nonetheless, geological challenges and increased prices of inputs like energy has boosted the rise in costs. For example, more than half of the increase in the price of gold between 2002 and 2010 resulted from geological issues. These challenges are not expected to go away any time soon, meaning that the upsurge in costs will continue for some time to come.

Food

The 20th century experienced a high demand for food. However, thanks to high production, the prices never really shot up. Nonetheless, food costs have shot up 120% since the turn of the 21st century. This has been brought about by high demand for food and reduced yields. Additionally, natural catastrophes such as floods and drought have also contributed to the high food prices. The overall result is that the world’s food reserves are running low, but the demand for food, especially by the African and Asian continents, is still on the rise.

Besides, production of biofuels has led to pollution of land that was once arable. Last but not least, land shortages are aggravated by massive rural to urban migrations. The expansion of urban areas to accommodate the rising population is said to be eating up land that could be used to produce food.

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