Is the higher price of petrol justified?

BBC News reports that the price of petrol has been creeping up steadily since the beginning of 2009 despite the fact that the price of crude oil hase been falling. The average price of a litre of petrol is now 90.48p and diesel 100.74p, analysts Experian Catalist said. This compares to a recent low on 6 January of 85.89p for petrol and 98.06p for diesel. However, the price of crude oil is now 40% lower than the last time petrol cost 90p a litre, back in March 2007, according to the AA. Oil prices have tumbled by more than $110 since July last year. US light, sweet crude is currently trading at about $34 a barrel. Link

What factors, other than the price of crude oil, do you think influence the price of petrol? Do any of these justify the increase in the price of petrol?

Concern over rising rice prices

The price of rice could rise sharply, causing another shortage of the staple grain. Last year the price hit levels not seen in decades, which led to shortages - and riots - in many countries. There are concerns this year's harvest may not live up to expectations because of poor weather and a lack of the credit that farmers need to buy fertiliser. The Thai Rice Exporters Association has increased the price of its benchmark white rice by 3% in the past week to $608 a tonne. It is the fourth consecutive week of increases. A year ago rice cost $370 a tonne but shot up to nearly $1,000 in mid-May 2009.

This is a good example to try out your market analysis and think about why it hasn't been possible to use buffer stocks to stabilise price. Think about the effects of the rise in price - winners and losers?

Link to BBC News

Why are food prices rising?

Food prices have been rising steadily in the past few months and the effects are being felt globally. As agricultural commodities such as wheat and dairy trade at record highs, some governments, such as Russia, are implementing price controls on selected types of bread, cheese, milk, eggs and vegetable oil. But why is food getting more expensive? What role do biofuels play and how has the weather affected crop yields this year? How does the cost of oil factor into the price of food? A really informative FT multimedia feature explains. Click here for link.

Ticket touts back in the news

Two interesting articles about ticket touts, a subject much discussed recently in recognition that they are unlikely to go away. The FT reported that Madonna is endorsing the sell-on of concert tickets, condemned by some concert promoters as scalping or touting, by making two leading companies in the secondary ticket market official partners for her forthcoming Sticky & Sweet tour of North America and Europe. Secondary ticketing companies enable the public to trade their tickets online with customers who are prepared to pay above their face value. The company takes a cut of about 10 to 15 per cent. Many sports promoters complain that they are not getting any share of the premium on these ticket sales and concert promoters in the UK have pressed unsuccessfully for the government to outlaw the practice. Madonna endorses seconday ticket markets

According to The Observer ticket touts will make more than £10m in the next week by cashing in on the success of Britain's football teams in Europe and at home But potential buyers are warned to be wary. It is illegal to resell football tickets in the UK - unless it is through an official, recognised third party. However, many of the online firms are able to flout the law by operating offshore, out of reach of the UK authorities. Details here.

Think about the market conditions that enable secondary markets (ticket touting) to exist. Should the law be used more effectively against them or should they be allowed to trade under certain conditions (eg give a percentage of the earnings back to the original body that issued the tickets)?

Thailand calls for a rice cartel

Thailand wants to form an Opec-style rice cartel to give it more control over international rice prices. The world's biggest rice exporter plans to talk to Laos, Burma, Cambodia and Vietnam about co-operating on prices. Rice prices have tripled so far this year with countries such as India and Vietnam restricting their exports. But the idea was met with opposition. The Philippines, the world's biggest importer of rice, also raised objections. "Almost three billion people are rice eaters," said Edgardo Angara, chairman of its senate committee on agriculture. "It's not a good idea, it's a bad idea. It will create an oligopoly and it's against humanity." BBC News

Think about how a cartel of this nature would have control over rice prices. Who would gain from such an arrangement?

The biggest threat to the world economy isn't the sub-prime crisis. Nor is it the credit crunch or the US recession. It's food.

Food prices are soaring. Not since the early 1970s have we seen wheat prices jump so dramatically. Rice prices have also spiked upwards. For the rich developed countries, the rise in food prices is, so far, not much more than a minor inconvenience. For other nations, though, the recent gains in food prices threaten severe economic and social distress. Rice, after all, is the staple food for half of the world's population. What should they do if prices suddenly go through the roof? This is a really good analysis, by Stephen King, of the demand, supply and policy factors behind this dramatic rise in world food prices and its potential impact.
http://www.independent.co.uk/news/business/comment/stephen-king/stephen-king-food-protectionism-could-provoke-a-crisis-on-a-par-with-1970s-oil-shocks-812753.html

The rising price of bread

The price of bread is the highest it has ever been. It's all down to the rising cost of wheat, which has doubled in the past year alone. What is going on? A good analysis of the complex pressures across the world that are affecting the bread market.

http://www.guardian.co.uk/environment/2008/apr/16/food.ethicalliving

Do you think prices are likely to go higher? How could consumers respond? How price elastic is the demand for bread? What type of good is bread?

Agflation

Agflation: The real costs of rising food prices. Farmers can't keep up with rising demand. The world is in a food crisis that's already boiled over in some places. A really good overview of the situation from Reuters. Look at the world map to locate the crisis points then explore the policy responses. What effects will these have in the countries concerned and in the rest of the world?
http://www.reuters.com/news/globalcoverage/agflation

India introduces rice export ban

The Indian government has banned the export of non-basmati rice to try and control soaring domestic food costs. The decision, one of a series of measures to curb inflation, was taken during an emergency cabinet meeting. Traders say rice prices rose by 10% last year,

The price for exports of aromatic basmati rice has also been raised to $1,200 per tonne to discourage exports. The move could have an impact on rice prices globally as the country is the third largest exporter of the grain - a staple food in many countries.

http://news.bbc.co.uk/1/hi/world/south_asia/7323713.stm

http://news.bbc.co.uk/1/hi/business/7328087.stm

Also, a good article and video from the BBC News site on the global rise of food prices.

http://news.bbc.co.uk/1/hi/world/7284196.stm

http://news.bbc.co.uk/1/hi/world/7289550.stm

Rising Prices

Three items on rising prices the BBC website today. The following video focuses on risng wheat prices and their effects on those in farming and consumers:
http://news.bbc.co.uk/media/avdb/news/uk/video/158000/bb/158238_16x9_bb.asx?ad=1&ct=50
Oil prices continue to rise, attributed to the falling value of the US dollar against the Japanese yen and the euro and failure of OPEC to increase production despite increases in demand from China. Geof Riley provides a good analysis of the situation on tutor2u.
http://news.bbc.co.uk/1/hi/business/7289070.stm
http://www.tutor2u.net/blog/index.php/economics/comments/110-for-diesel-and-further-rises-to-come/
China's inflation hit 8.7% in February, the highest rate in over 11 years. Soaring food prices were driving inflation, up 23.3% in February against the previous year.
http://news.bbc.co.uk/1/hi/business/7288940.stm