Resource transitions rarely move in straight lines. They oscillate between scarcity and abundance, creating opportunities at each swing.
The Scarcity Spike Pattern
Every resource scarcity follows predictable stages that create specific opportunities:
Stage 1 - Hidden Tightening: Supply-demand balance shifts subtly Stage 2 - Price Creep: Gradual increases dismissed as temporary Stage 3 - Shortage Recognition: Sudden awareness triggers hoarding Stage 4 - Price Explosion: Panic buying drives parabolic moves Stage 5 - Substitution Search: Desperate seeking of alternatives Stage 6 - New Supply Response: High prices incentivize production Stage 7 - Overcorrection: New supply exceeds actual demand Stage 8 - Price Collapse: Abundance replaces scarcity
Michelle mapped these stages across dozens of resources. She built trading strategies for each stage, but her greatest profits came from facilitating transitions—helping organizations navigate from scarcity to substitution to new abundance.
The Innovation Catalyst Effect
Resource scarcity catalyzes innovation that wouldn't occur during abundance. These innovations often permanently change resource landscapes.
David tracked scarcity-driven innovations: - Oil crisis → Fuel efficiency revolution - Rare earth shortage → Recycling technology boom - Water scarcity → Desalination breakthroughs - Helium shortage → Recovery system innovation - Phosphorus limits → Precision agriculture
His investment thesis was simple: identify resources entering scarcity, invest in innovation addressing that scarcity, profit from both the shortage and its solution.
The Substitution Acceleration
Scarcity accelerates substitution that abundance prevents. Alternative resources suddenly become economically viable.
Barbara built businesses around substitution: - When copper spiked → Aluminum wiring solutions - When lithium constrained → Sodium battery development - When concrete shortages hit → Alternative building methods - When protein scarcity loomed → Insect farming systems
Each substitution began as emergency response but often created permanent market shifts.