THE DAILY CHART: IMF's Australian energy advantage

"Three numbers tell the story," says IMF chief economist Olivier Blanchard. In 2011 and 2012 the world economy is expected to expand at 4.5 per cent, with developing countries growing at 6.5 per cent, clearly outpacing developed economies at 2.5 per cent. These diverging economic outlooks are nothing new and their fates are united by the threat of rising oil prices and inflation, according to the IMF. This graph from the IMF's latest World Economic Outlook (page 34) shows that with oil prices around $110 a barrel, the price gap between crude and other fossil fuels like Australian coal and liquid natural gas has seldom been greater and "the shift in market share away from crude oil is likely to continue".

Australia is well placed to benefit from oil's rise, with its ample LNG and coal reserves. Developed countries will tend to opt for LNG as a transitional energy source between coal/oil and whatever comes next, but poorer nations will need a cheap source of energy as they develop – that means coal. Higher fuel prices are a greater problem for developing countries because, coupled with rising inflation driven largely by food, consumers in those countries have to devote more of their income to essential items and don't have much left over to absorb energy price increases. Hence, the IMF is warning developing nations to keep inflation in check with higher interest rates and capital controls, or else they could face more wage disputes or even broad civil unrest like that which has been sweeping across the Middle East.