US crude oil and product stocks have started the year where they finished in 2010. As the black dot on the above chart from Petromatrix shows, they are at yet another seasonal record. In terms of numbers, they are 101 million barrels above 2008 levels, and even 8 million barrels above last year.
It is clearly a nonsense that prices are still rising, when inventories have been so high, for so long. It is also bound to cause serious problems for the chemical industry when these stocks begin to be unwound, and prices fall.
In the short-term however, it is also leading to political instability in emerging economies, as food prices rocket. As the Financial Times has noted, "intensive agriculture is effectively the extraction of food from petroleum":
• India's government is facing serious problems over the rising cost of onions, an essential cooking ingredient
• China is now allowing vegetable trucks to travel toll-free on motorways, to try and keep costs down
• S Korea has released emergency supplies of cabbage, pork and other staples
The blog can't help feeling that this state of affairs can't continue for too much longer.