The Convergence of Commodities

As a commodities trader, he said, he wasn't concerned with who was producing something, or why. He was interested in demand, and there are, in his world, only four demands:

1. the creation of transportation,
2. the generation of heating and power,
3. the manufacture of materials and
4. the provision of sustenance through food and water.

“Historically, these four demands never used to talk to one another – they were silent,” he said. That is, they lived in different worlds of pricing, depending on the amount of energy they could produce per dollar spent.

"[Now] ....We don't care what commodity you buy. We called it a bushels-to-barrels-to-BTUs convergence. Take corn:
• It can now create heating and transportation; it's actually very good for burning to generate electricity.
• It can create plastic or cardboard, so it's a source of materials.
• And finally, you can eat it if you want. It can meet any of these demands. And you can use petroleum to create plastics, or to create fertilizer to grow food – suddenly, we are indifferent to what commodity we are buying to meet our demands.”



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