Commodities bubble brews?

— -- The world isn't running short of potash. At current consumption rates, there's enough to last 300 years, according to the International Fertilizer Industry Association. But there does seem to be limitless optimism about future fertilizer use — as well as the upward spiral in the cost of potash itself, up 150% over the past 12 months.

It's not just potash. Across the board, commodities prices are soaring. On Wednesday, light sweet crude oil closed at $133.17 a barrel, more than double the price 12 months ago. Overnight it topped $135.

Commodities are the first growth industry of the 21st century. The prices of energy, basic metals and foodstuffs have soared, and so, some say, has speculation. This year alone, cocoa is up 40%, copper has soared 24%, and corn has risen 33%. And the price charts for some commodities are beginning to look suspiciously like the Nasdaq fever line in 1999, just before the tech-laden stock index crashed in March 2000. And, as the economy continues to work through the more recent crash in home prices, the question inevitably arises: Is there a commodities bubble brewing?

Possibly, say many experts.

"Certainly, we're seeing a lot more interest (in commodities) across the board," says Barry Cronin, chief investment officer at Taylor Investment Advisors, a Greenwich, Conn., money management firm. "There's no mistaking that there's a significant amount of speculative money in the market." But is it a bubble? "That's the $100,000 question," Cronin says.

Price bubbles involve irrational behavior by investors drawn to the prospect of quick profits. But such manias aren't entirely measurable. There's no magic indicator that flashes bright red when a reasonable investment trend suddenly becomes unreasonable. Instead, you have to look at several different ways to measure bubble behavior. By those measures, the bubble in commodities is forming, but it's not at full froth.

Nevertheless, new signs of commodities mania keep bubbling up. The basic sign is a near-vertical rise in prices, says Ben Inker, director of asset allocation for the GMO funds. "If you look at the way oil has been moving lately, it's almost inconceivable that there is information about the future supply and demand of oil that's driving this," Inker says. "It cannot be the case that, relative to three weeks ago, we have information that would make the price of oil go up that significantly." The price of a barrel of light, sweet crude oil has soared 17.4% the past three weeks.

And Wall Street, for one, thinks that the market for commodities is hotter than the market for stocks.