High oil prices may spur greater US efforts to tackle climate change

Cambridge

PRICES of fossil fuels increased sharply in October. European prices for natural gas hit a record peak. Prices for thermal coal in China have also reached all-time highs. The price of US crude oil is above US$80 a barrel, its highest level in seven years, prompting US President Joe Biden's administration in August to call on Opec and other major oil-exporting countries to increase production.

Although these high prices partly reflect country-specific factors, there must be some more fundamental cause. After all, as with fuel prices, indices of mineral and agricultural commodity prices have also recovered from a 6-year slump, re-attaining their 2014 levels. The long-standing correlation of different commodity prices suggests a common macroeconomic explanation. And the obvious reason why energy prices have risen in 2021 is rapid global economic growth.