The prices of two of the world's major fuels - oil and gas - were already growing. Now they are about to skyrocket as the Russian war with Ukraine and the response by western economies pans out.

Russia is one of the world's major producers with 10% of the world's oil and more than a third of the European Union's natural gas.

Readers might remember that OPEC in 1970s used its leverage as a cartel of global oil producers to demand higher prices.

The result was a decade of higher inflation.

With western governments slapping sanctions on Russia, Putin et al may use the country's vast oil and gas reserves to the same effect.

Hogsback wonders whether it is a coincidence that talks between that other major oil producer - Iran - and the US and European Union seem to have gathered pace again after they were scrapped by former US president Donald Trump.

Open cut coal mines are particularly vulnerable to fuel price hikes.

The International Energy Agency noted the holiday of low fuel prices was over. 

"Oil prices dropped sharply in the first-quarter 2020 and were reflected in diesel prices, which in June fell to the lowest level since 2003," it stated.

"As global oil prices increased, nearly doubling from June to July, so too, did fuel costs for coal producers."

The increase in the price of energy-related commodities such as coal and gas as a result of the Ukraine war as well as the concerted push into renewables with new metals such as lithium as well as the staples such as copper and silver is expected to cause their prices to surge.

This should lead to higher headline revenue figures for producers, however, governments and unions may see this as an opportunity to take a larger piece of the pie.

Readers may recall former Australian Kevin Rudd in 2010 was about to roll out a resources super profits tax because he believed mining companies were making too much coin.

This plan was only stopped after a palace coup by his deputy Julia Gillard.

State and federal governments who had their balance sheets badly battered after dealing with their COVID-19 responses may seek to raid the coffers of mining houses to help pay for their growing lists of promises.           

Governments can no longer rely on greater streams of cash from sales tax from Australia's over-inflated property sector, which has been buoyed by artificially lower interest rates put in place by the Reserve Bank of Australia during the COVID crisis.  

On top of that, union members will be demanding their leadership win greater pay increases to offset the rising cost of living brought about by the increase in inflation.

These added costs will place more pressure on mine managements to ramp up production to achieve economies of scale and to expand operations though brownfields development to make greater use of existing sunk costs of infrastructure.

The shortage of labour and the higher costs of both consumables and fixed plant will compound the margin shrinkage problem even further.

Hogsback reckons Putin's war may actually be the opening salvo in a war on costs at every mine site.