Essentially, the problem is a timebomb which is set to explode next winter unless governments work together to increase arable planting, establish emergency stocks, and subsidize fertilizer costs whilst gas prices remain at today’s record levels.
Chemicals and the Economy
Problems in the housing market aren’t just confined to the US, UK, Germany and China. The average house price/income ratio is now back to the highest level since records began. And the problem for homeowners is that potential buyers are already starting to disappear as mortgage rates rise – and affordability reduces.
Energy and financial markets are exacerbating the risks ahead. Oil prices at current levels – as the chart confirms, they now account for more than 3% of global GDP – have historically led to recession as the chart shows. The reason is that consumers have to cut back on their discretionary spending, which drives economic growth, in order to heat their homes and travel to work and school. Today’s high levels of natural gas prices add to this risk.
This is why we are facing a K-shaped recession. Companies and investors have a difficult time ahead. They not only have to navigate a potentially major downturn. But they also have to completely reposition their portfolios for the New Normal world that will follow.
These are difficult times, and there is no guarantee that they may not get worse. But they also remind us of the critical need to move beyond the Age of Oil, and develop more sustainable energy resources for the future.
Automakers are ahead of the game in terms of strategic planning. They soon realised the move to EVs meant their traditional business model, based on proprietary engine technology, would inevitably become obsolete. And so they quickly realised they need to pivot to focus on AVs and become software-driven. The rest of us need to catch up.
Plastics recycling is set to become a major new industry, based on the need to use renewable carbon. As the Nova Institute has shown, there is scope to expand production by 15x by 2050. And so if plastics companies don’t get to work now, new entrants will quickly emerge to replace them.
The issue is simply that investors are in a state of Denial. And so there is a growing risk of a financial crisis as reality finally dawns on them.
BP are aiming for their new joint venture in China to provide drivers with a fresh, fully-charged battery in less than a minute – and save 2 million tonnes of CO2
Two core trends are playing out in the smartphone market, now it has gone ex-growth. The weaker players are suffering major hits to their revenue and profits. And the most successful company, Apple, is busy accelerating its move into the more service-based markets of the future.