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The Great Commodity Bounceback

Source: World Bank

Most global commodity prices were higher than their pre-pandemic levels during the first quarter of 2021. Metal prices are expected to continue their upward trend, rising by 30% during 2021, according to the World Bank. This jump in commodity prices parallels the rise in global economic activity, the impact of stimulus bills and changes in supply factors.  

The crude oil industry saw a record-fast recovery after a price and demand collapse in 2020. The predicted average cost of crude oil for this year is $56 per barrel —  about one-third higher than its cost in 2020. Natural gas prices also rose by one-third as a result of increased demand during the winter season.

The World Bank expects that price levels will “remain close to current levels throughout the year” driven by “global economic rebound and improved growth prospects.” The report notes that all commodity markets heavily depend on how long the economic implications from the pandemic last and how well the risk is managed by governments.

How the Pound Is Holding Up to the Dollar

Source: CNBC

The British pound sank further against the U.S. dollar last week after the Bank of England said it expects the U.K. to fall into a two-year recession — in what would be the longest recession ever recorded. The BoE raised interest rates to 3% from 2.25%, its largest hike in over three decades, in an effort to fight inflation.

The pound has fallen steeply against the dollar over the past few months as financial markets reacted to the turmoil in British politics, including former Prime Minister Liz Truss’ proposed economic policies. It reached a record low against the dollar in September, at $1.03. Inflation rose above 10% the same month, contributing to a growing cost-of-living crisis. The weakened pound is compounding the burden on British households by increasing the already high price of imported goods like food and gas. 

In addition to the pound, most major currencies have lost their value against the dollar this year — a result of the Federal Reserve’s aggressive interest rate hikes. As the dollar’s value rose nearly 20% in 2022, the Chinese yuan, euro, and Japanese yen all reached new lows. The pound and the euro rose this week against the dollar as the euro zone grew in the the third quarter and investors anticipated China easing its COVID-19 restrictions.

Electric Cars Gain Popularity As Fuel Costs Rise

Higher gas prices are incentivizing people around the world to buy an electric vehicle, a new survey from Oliver Wyman shows. More than half (58%) of consumers said that high gas prices would motivate them to buy an EV, with “very high” gas prices pushing that number to 73%.

Chinese car buyers were most likely to say they would buy an electric vehicle, with 90% saying that gas prices over 10 yuan per liter ($6 per gallon) would make them consider an EV. Government benefits in China also help support higher consumer interest, including subsidizing the purchases of EV buyers with longer driving ranges and allowing electric cars on restricted roads during rush hour. 

Brazilians were second-most likely to consider buying an EV, with 88% saying that gas prices over 8 real per liter ($1.56 per gallon) would incentivize them to switch. U.K. consumers were the least likely to buy an electric car; a potential result of the government ending its subsidies for new EV sales and expanding the U.K.’s charging station network instead.  

Apart from gas prices, free vehicle charging was the top incentive for buying an EV, with 59% of consumers saying it would motivate them to make a purchase. Discounts for EV purchases (43%) and free parking stations (31%) were also motivators.

The World Is Bullish on Solar—Can Supply Chains Keep Up?

The world is rapidly adopting solar power — solar energy generation increased 22% between 2020 and 2021. The International Energy Agency (IEA) expects that number to jump again this year, as countries that relied on Russian fossil fuels invest more in renewable energy. Government initiatives have also helped grow solar energy, with incentives in Brazil, subsidies in China, and new tax credits in the U.S. promoting growth.

In the U.S., residential solar power installations rose 34% from 2020 to 2021 — though solar power generated only 3% of electricity last year. In Europe, projects in Spain, France, Poland, and Germany accelerated solar adoption. Australia has the highest residential adoption rate of solar power, with 31% of homes using solar energy. China is the largest contributor of solar capacity, with 31% of the world’s capacity, most of it due to large solar farms. 

Solar power costs rose last year as COVID-19 supply chain disruptions have raised the cost of solar panel production and installation. In 2021, prices rose as much as 18% in some areas of the solar industry. Despite rising costs, the IEA predicts that solar power will retain or increase its cost advantage compared to other renewable energy sources, like onshore wind farms, over the next two years.

Majority of British Say Sunak Should Call Early Election

According to a new survey by YouGov, more than half of British adults think that new Prime Minister Rishi Sunak should call an early general election, rather than waiting until one is legally required. The poll, sampling opinions of 2,398 adults, shows near unanimous majorities in favor of calling an election across region and gender. The only surveyed demographic that did not fully align was age: 60% of those aged 18-24 and 66% of those aged 25-49 preferred calls for an early election; 50% of adults over 65 disagreed.

According to a new survey by YouGov, more than half of British adults think that new Prime Minister Rishi Sunak should call an early general election, rather than waiting until one is legally required. The poll, sampling opinions of 2,398 adults, shows near unanimous majorities in favor of calling an election across region and gender. The only surveyed demographic that did not fully align was age: 60% of those aged 18-24 and 66% of those aged 25-49 preferred calls for an early election; 50% of adults over 65 disagreed.

In his first public remarks as prime minister, Sunak reiterated that he would focus on stability and unity for the country. However, the BBC reports that the new prime minister told his party’s ministers behind closed doors that he had “ruled out” calling for an early general election, despite strong demands from the opposition Labour Party. 

The next general election must be called by January 2025 as the last one was held in ​​2019, which Boris Johnson and the Conservative Party won in a landslide, garnering the greatest share of popular vote of any party in a general election since 1979. Current polling shows that has flipped — some polls now show the largest public preference for Labour in a quarter-century.

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