A fridge in every Chinese home and Indians swapping bicycles for cars – the demand side arguments for higher commodity prices are now well rehearsed. Certainly since the start of the millennium, there has been a structural shift in consumption. But it is likely the demand shock from industrialisation of the developing world is, for the most part, discounted by markets. Less discussed has been the supply side response to higher commodity prices. Stocks of industrial metals and grains have fallen to multi-decade lows. Meanwhile, the world’s cushion of spare oil capacity is down to a measly 3 per cent of consumption. However, outside agricultural products, production has not accelerated. For oil, that is largely because of political barriers to investment in the most efficient prospects. Mining companies have increased capital expenditure, but not at a fast enough rate to matter (see following notes).

Yet there can be no getting away from the cycle. Even Goldman Sachs, having raised the spectre of $200 oil, foresees a spike rather than a plateau. So what will eventually bring prices back into equilibrium? Resource nationalism is unlikely to abate soon and, if anything, protectionist sentiment is rising. There is no sign that miners are about to change their culture of underinvestment. Meanwhile, although innovation can stretch supplies, through the development of everything from nickel-lite stainless steel to genetically-engineered seeds, progress is slow.