Leave it to the IMF to be late in comments about the nature of the world economy and potential solutions to nagging problems. The body released a report which said that oil prices were high and would stay that way.
Specifically, the IMF said:
According to an analysis by the IMF, released as part of its World Economic Outlook (WEO), global oil markets are in a period of increased scarcity, as oil demand in emerging economies is rapidly catching up with demand in advanced economies and production constraints are beginning to bind in some major oil-exporting economies, where oil fields have reached maturity.
The agency went on to argue that renewable energy was the most ready and important solution to the oil price problem. The solution may be correct. The readiness of it is not.
The IMF document made no mention of the Japan earthquake and the effect it would have on global nuclear power development. There was also no analysis of what a doubling of the price of corn may do to the prospects of ethanol, or the challenges of attaching solar power facilities and wind turbines to aged electrical grids. The problems new sources of energy create are probably more expensive than the cost to underwrite their development. The IMF did not suggest where the capital would come from in an age of austerity.
Other than those few criticisms, the report was perfect.
Douglas A. McIntyre
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