NEW HAVEN, Conn. — Could the television image of the Greenland ice cap crumbling into the ocean because of global warming — indirectly and psychologically — be partly responsible for high oil and other commodity prices? The usual explanation of today's scarcity and high prices focuses on explosive growth in emerging countries, China and India in particular, whose demand for scarce resources is "insatiable."
But psychology also matters in speculative markets, and perhaps that image of the Greenland ice disappearing makes it seem all too plausible that everything else — land, water, even fresh air — is running out too.
Let's take a case study, the last generalized boom-bust cycle in commodity prices, which caused these prices generally to rise (more or less) from some time in the 1960s until the 1980s, and then generally to fall until the mid-1990s. Maybe images matter just as much as substance in explaining that.