Existing reserves of oil are running down and not many new reserves are being discovered. But the biggest factor putting upward pressure on the price is the huge growth in demand from China, India and other developing countries. These countries consume half the world's energy and accounted for 80% of the growth in demand for oil in the first half of this decade. That growth is almost certain to continue and keep prices rising in the years to come. Martin Wolf, of the Financial Times, summarises the outlook for oil with three facts: it's a finite resource, it drives the global transport system, and if emerging economies consumed as much oil as Europeans do, consumption would jump by 150%.

Next, the global food crisis. Across the world, the basic cost of food has risen by more than half in the past year, with grain prices the worst affected. Rioting over food prices has occurred in more than 30 developing countries.

The most fundamental explanation for this is that rapid economic growth in China and other emerging economies has raised consumers' purchasing power, generating rising demand for food and shifting food demand away from traditional staples towards higher-value foods such as meat and milk. This dietary shift is leading to increased demand for grains to feed animals.

But this is now a long-term trend and doesn't adequately explain the recent price surge. It's more convincingly explained by the effect of the US and other countries' diversion of grains towards the production of ethanol and other biofuels, and by the loss of wheat production caused by adverse weather conditions in key production areas, particularly the drought in Australia. So, China is not responsible for the food crisis after all? Sorry, not that simple. Why are the Americans subsidising their farmers to shift into growing maize for ethanol? Because they're reacting to the high price of oil, which would be higher than it is had they not done such a (dubious) thing.

Then we've got the high price of oil adding to the costs of farm production, via transport costs, the cost of mechanical cultivation, and the cost of fertilisers and pesticides. Some dirt-poor farmers have had to give up planting crops. As for adverse weather conditions, while we can't prove our exceptionally long drought is a product of global warming, there's a fair chance it is.