Wall Street Journal (October 22)
“Much has changed since Beijing sparked a rare-earths panic in 2010. China was home to 95% of the world’s production, so when it tightened export quotas by 40% and then cut off shipments to Japan over a territorial dispute, buyers world-wide feared scarcity and prices rose tenfold.” Ironically, this spurred innovation, the use of substitutes and the reopening of mines in other countries. “By 2012 the world faced a glut of rare earths. Prices collapsed as much as 80%.” The rare-earths rollercoaster demonstrates “the ability of markets and human ingenuity to adapt to ill-advised attempts to hold natural resources hostage. When they’re allowed to work, markets always defeat mercantilism—a useful lesson for Beijing’s economic reformers.”
Tags: Beijing, China, Collapse, Export quotas, Glut, Innovation, Markets, Mercantilism, Natural resources, Prices, Production, Rare earths, Scarcity, Substitutes
Wall Street Journal (October 22)
“Much has changed since Beijing sparked a rare-earths panic in 2010. China was home to 95% of the world’s production, so when it tightened export quotas by 40% and then cut off shipments to Japan over a territorial dispute, buyers world-wide feared scarcity and prices rose tenfold.” Ironically, this spurred innovation, the use of substitutes and the reopening of mines in other countries. “By 2012 the world faced a glut of rare earths. Prices collapsed as much as 80%.” The rare-earths rollercoaster demonstrates “the ability of markets and human ingenuity to adapt to ill-advised attempts to hold natural resources hostage. When they’re allowed to work, markets always defeat mercantilism—a useful lesson for Beijing’s economic reformers.”
Tags: Beijing, Export quotas, Glut, Innovation, Markets, Mercantilism, Natural resources, Production, Rare earths, Substitutes
Washington Post (March 25)
Supplying Europe with nearly a third of its natural gas, Russia seems to give incredible leverage. This is misleading. In 2013, “natural gas represented only 22 percent of Europe’s total energy consumption.” Moreover, Europe currently has significant stores, substitute sources and substitute fuels. “The message here is simpler: The dangers of a cutoff should not intimidate the West. They’re overrated.”
Tags: Cutoff, Energy, Europe, Leverage, Natural gas, Russia, Substitutes
