The world needs more oil. Free markets will find a strategy that is both efficient and generates wealth. Free markets don't know when to stop. Let's look at trade (see Transformation and Trade section of Neoclassical Theory of Production).
This topology theory assumes that all markets/countries have their own topological space/manifold. In the case of expanded communities or as Greenspan calls it “home bias”, has been removed, there exist a transformation that is due to the convolution of independent labor probability densities. What needs to be discussed is the topic of trade or, in other words, specialization.
Basic axiom: Each market/country topological manifold represents the same object.
This axiom means that all econo-political-social topology spaces can be transformed into each other. I will make the assertion that one can form a topological manifold that is diffeomorphism. This is the easy way out in showing the Trade aspect of globalization and its incorporation into the topology of global production. See my blog Neoclassical Theory for math.
The pullback (push forward) bases transformation is a representation of the real exchange rate. The pullback (push forward) bases transformation merges the purchasing power and the trade, non-trade definitions of real exchange rate. This assumes the nominal exchange rate (e) is independent of the bases vectors. One can look at the diagonal elements of the pullback (push forward) bases transformation as a representation of “the real exchange rate” of that bases vector element and the off diagonal elements as a some sort of technological change, if one exists.
A good example of this is sugar into ethanol. If a bases vector includes oil and sugar then the pullback (push forward) bases transformation represents the change in cost of oil produced in market A over the change in cost of ethanol produced in market B and the other diagonal is the change of cost of oil produced in market B over the change in cost of ethanol produced in market A.
Placing more productive agriculture land over to producing energy will in turn put pressure on adding marginal land to use. I'm including all crops that can be turned into energy and husbandry that can be used for bio-mass conversion (Soylent Green is People!!!!!).
Energy is inelastic. The free market will test this by giving a high profit margin in producing energy not food. More developing countries will take to this “cash crop”, leaving food production behind. Such a move will be inflationary, along with the accompanying inflationary expectation, in agricultural and animal commodities.
Our so-called elected officials will not do a thing until energy and food prices are sky high and people begin to revolt, in mass, on the streets of the “good old US of A”.
