By Princess Hildegard von Liechtenstein

Events are not about what is possible but much rather about what is probable. This has to do with psychology and the irrational result of psychology - to be precise politics. The subjects of energy and electricity generation have mutated into an ideology that is mainly politically motivated. Sometimes information on these subjects is purposely or inadvertently misguided. Numbers published by states, agencies, NGOs, companies or journalists can often be unreliable, imprecise, mysterious or straightforwardly wrong. For that reason, I will start by raising for discussion 19 questions concerning technological and economic issues which are evidently not common knowledge and thus need clarification.

Question 1: Can exploding crude oil prices drive inflation? 
There are four different, albeit interrelated, views of what drives inflation. And what is true for overall inflation, is true for one commodity as well. Inflation is caused by:

1. Too much money chasing too scarce supply
2. Rising production costs forcing companies to boost prices
3. Demand by a strongly growing economy creating more pricing power for up-stream as well as downstream companies
4. Demand affected by political disruptions.

There is a strong correlation between inflation and an industrial output gap (= spare capacity of this special industry). That translates equally into the free capacity of oilproducing companies, most of which are national oil companies (NOCs). So the answer to the question is yes, exploding crude oil prices can drive inflation. The alternative is less growth in GDP.

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