European and American manufacturing companies, from steel to furniture, are re-gaining competitive power, as rising transport costs are making Chinese rivals less competitive. Oil has become expensive. Normally, spikes in oil and food prices are not worrisome, because those prices tend to fall back to long-term averages. But now, as in developing nations the demand rises structurally, it becomes very well possible that the inflation on food and oil stays higher than it has in the past.

The whole paradigm of manufacturing and mass production was possible because it made things very cheap, and one of the main drivers of cheap manufacturing was cheap oil. Oil was cheap, energy was cheap.  This is no longer the case and the rising prices are profoundly driving up nation’s inflation numbers. As this week’s Newsweek article illustrates, “In the United States, food and oil now account for about half of the inflation; the figure is around two thirds in Europe, and even higher in some developing nations”.

So, when prices of products from abroad keep rising due to increasing transportation costs, and if food production doesn’t keep up with the new needs of developing nations, we’ll have to share limited or even declining resources with more people, with increased prices. Or do we see a return of protectionist local markets, that were previously globalized, in order to facilitate and control a nation’s own food and fuel production.