Global shortage of commodities looming

In 10 years, today’s prices may look like a bargain

Our peak oil thesis gained some new respect this week as oil prices hit yet another record, the first close over US$100 per barrel. Demand fluctuates, but it is all about supply, and supply concerns this week showed how tight the market really is.

Peak oil has lots of press, but what about peak copper? Peak zinc? Peak gold? Sounds preposterous, but maybe it’s not so far-fetched. Nearly every commodity is experiencing some supply issues, for a host of reasons. Add it all up, and it means potential supply shortages in the future. Demand may slacken this year, but in the next 10 years today’s high commodity prices may actually look like a bargain.


Let’s take a look at some of the issues facing commodity projects today, and give some examples of companies that have already been impacted by them.

Cost overruns: Inflation, equipment shortages, and labour issues have combined to wreak havoc on so many new commodity projects that long-term supply issues may result.

Simply put, because of inflation, a commodity project that appeared economical two years ago may no longer be viable. Case in point: Novagold’s (NG/TSX) Galore Creek project in British Columbia.

Financial Post