Rising oil prices

The Japan Times has interviewed several experts in an interesting article today, noting that the ongoing price surge is expected to carry the crude oil price to well over $100 per barrel as early as this month:

"If this situation does not change, oil supply could become scarce in two to three years," further driving up prices, according to Akio Shibata, deputy director at Marubeni Research Institute.

The Japan Times: Rising oil prices threaten health of wide range of companies

Meanwhile, The Wall Street Journal gets it (mostly) right about how Japan Looks Beyond U.S.:

Though still export-dependent, Japan's economy is less U.S.-dependent than before. In 2000, 30% of Japan's exports went to the U.S. This year only 20% will -- probably less than its exports to China, including Hong Kong, for the first time.

This trade shift means that if the U.S. economy alone goes bad, growth for Japan "will become more difficult but not catastrophic," says Macquarie Securities economist Richard Jerram.

But, putting the two stories together (which I am sure a lot of people are doing right now), it seems clear that with sustained high fuel prices, Japan will have to reevaluate how to stay rich. The problem of being the World's second largest economy is similar to being second in a car race - you get the "pull" from being behind the leader, and when that "pull" is gone, you no longer get the benefit of the free ride. Depending on exports to China is not going to be an attractive option as China also feels the pain of high energy costs and other Peak Oil synergy effects.

(Photo: Yomiuri Rising gas prices top 150 yen per liter)