Finally, the North Sea explorations of the 1970s and the completion of the Alaskan pipeline have resulted in increased supplies of non-OPEC oil. Energy shocks, like those of the 1970s, are not so likely to occur in the near future, given the size of the surplus that now exists. The biggest difference between the 1970s and the 1980s expansions was that during the 1980s not all industries operated at the same high rate. As the separate industries reached capacity their firms added to their capital stock. This gradual increase in capital kept the average rate of capacity utilization from rising as rapidly as during other expansions and allowed for a more orderly progression of capital formation that should keep the lid on inflation in the coming years.
Most commodities are in excess supply.
Currently, neither oil nor sugar nor any other basic raw material was in short supply and the prices on most of these basic commodities, even though they had risen since the mid-1980s, remained at or near historic lows. In the late 1980s, the gap between the Consumer Price Index and the Commodities Price Index was almost twice as large as in 1983. A drought in the midwest during 1988 forced up the prices of many food commodities, like wheat and corn, but such climate-related supply imbalances are to be expected and they are generally and quickly reversed under more favorable climatic conditions. This range is consistent with a low-inflation environment. The employment cost index has slowly but steadily declined.