Wednesday, October 24, 2007

Oil and food prices, the bigger picture.

The Connection Between Food Supply and Energy: What Is the Role of Oil Price?

Peak oil represents a grave threat to our food supply. Few are aware of how important the petroleum industry is to the agricultural revolution in which we live. (Graphs in report show how use of fertilisers and oil/acre plummet with higher oil prices).Peak oil will do several bad things to the world's energy supply. It will force us to use coal, and the US turns its 200 year supply of coal into a 44 year supply. This implies that by the end of this century, we will NO LONGER have fossil fuels FOR ANYTHING. Going back to an animal-energy based economy means that approximately 5/6ths of us must die. The post fossil fuel world, lacking some new energy source, will consist of not many more than 750 million souls. What an ugly century this will be.

Posted by planning4acrash @ 08:18 AM (1213 views)
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20 thoughts on “Oil and food prices, the bigger picture.

  • I was surfing the net a while back and stumbled across this:

    http://en.wikipedia.org/wiki/Abiogenic_petroleum_origin

    And was surprised how good an argument it was. Apparently the Russians don’t believe that oil is actually a fossil fuel. Rather, it’s formed by carbon-bearing fluids seeping up through the earths mantle.

    For the conspiracy theorists, the idea goes that an endless supply of any resource makes it almost worthless. An “oil crisis” keeps prices artificially high (although obviously it does cost something to dig the stuff up). If it is true, I’m not at all convinced that it’s been done intentionally; herd mentality and the “green revolution” account for a lot of the publicity it’s got.

    After reviewing a few articles on the subject I decided that the evidence for either the fossil-fuel idea or deep-carbon idea was pretty even, although it’d be nice to be corrected if anyone knows anything I don’t. Thought I’d throw it in here to generate a bit of discussion…

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  • Interesting posting, planning4acrash, but I can’t see it stimulating much discussion on this forum. The message now coming clearly through on oil, with all its associated economic and socilogical effects, is just too disturbing in implication for people who (rightly) welcome a house price crash – as part of a sensible realignment of a system out of whack – but baulk at the possibility that the whole structure of their comfortable lives is about to come crashing down. It’s been a natural and an observable reaction – commented upon in depth by sites such as http://www.peakoil.com (psychology forum).
    The main element being: ‘I’d like a crash to shake things up, but then I’d like things to get pretty much back to normal – but in a fairer and more just way’.

    House prices, and the credit markets, are currently suffering from nothing more than good old fashioned gambling error compounded by greed. What keeps all the balls in the air, is a global economy underpinned by oil, and it’s now starting to fall apart. First – the soaring prices being passed on right along the line: transport, agriculture, pharmaceuticals, manufacturing – leading to the drying up of discretionary spending, and the slow strangulation of the retail market. Then, the gradual realisation, amongst a society (read: consumer base) denied serious information about the impending crisis, that their rosy futures and retirement funds may never see the light of day; leading to large scale unrest. Good job we’ve now got all those CCTV cameras and surveillance equipment in place the length and breadth of the UK – now, how lucky was that?

    Yes, I’m obsessed by the oil issue. But when you look deeper into the subject, and realise that we can’t manage any sort of transition to a post-oil society without mass suffering on a global scale – you have to be. If readers could take their immediate concerns a few steps further (maybe by reading Richard Heinberg or Kenneth Deffeyes online), they could do themselves and their families a big favour.

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  • And do you think we will do anything about it? We’re ACCELERATING energy use! We’re EXPANDING population. My guess is that we’re underestimating this threat, as we have always underestimated. Our need to constantly expand, expand production, expand consumption is directly tied into our debt-based monetary system and the way we implement market capitalism – these are the fundamentals that need to change before anything else. Unless we scrap our current economic/financial system for one that does not require exponential growth, we are doomed as a species. Renewable energy will NOT save us, becuase as this points out, we rely on oil as much as an ingredient as an energy source.

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  • There are and will be more bio replacements for oil ingredients, and for energy use, good old fashioned nuclear power stations are the way to go. We’re not going to run out of Uranium any time soon since it is so abundant. And if old style fission reactors sound like a bad plan (which they’re not, modern reactor technology is sound stuff – look at the French – they have them sitting right by the side of the roads and no-one gives them a second glance), then we may well be using fusion by then. So although we may have to change our dependence on oil, the process will be gradual as market factors make alternatives/development investment viable. “Animal-energy based economy”? Don’t make me laugh with your doom-mongering!

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  • Sorry Tyyonyyy your talking rubbish the price of Uranium is going through the roof bio replacement fuels are only viable with cheap oil as everybody is starting to realise. Whilst I agree nuclear power is the only way forward half the UK’s nuclear power stations are already out of action and the bunny huggers are stopping the building of any new ones.

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  • You can’t ‘make’ or ‘construct’ things out of electricity – you can only power things with electricity. All the ‘things’ you may want to consume, or power, will – somewhere along the line – depend upon oil for some part of the manufacturing & distribution process. Can you make plastics out of electricity? No. Can you grow crops with electricity alone? Again, no. Are bio-fuels the answer? No. Why? Because you have to give over already limited agricultural land to grow the crops – which reduces overall food production and forces prices up through the roof (read the news) – and because good old fashioned oil is still required at every stage of agricultural production (fertilisers, pesticides) because of its versatility and relative cheapness. Factor in bio-fuels as its replacement and, again, it costs more than its worth if your customers aren’t able to buy the resulting produce. To replace the UK’s dependence on fossil fuels, by bio-fuel use, would require another UK offshore given over purely to ethanol production. And that’s just for powering up the cars. I can’t foresee much of a market for cars being driven around aimlessly by the starving masses.

    ‘We may well be using fusion by then’. Will we? What insider knowledge do you have, that the rest of us seem to have been denied access to? And even if it came to pass, we’d still only be drowning in the surplus electricity that we’d have no actual use for.

    In short, you can’t replace the present multitude of uses for oil in any way that doesn’t pile on extra expense and environmental costs, and in such a way that the present economic structure and the environment itself would be unable to sustain it. The past 200 or so years have been an interesting blip, but now we’ve squandered nature’s one-off gift to humanity, and a period of permanent belt-tightening is now in order. And I’m not welcoming it either, because the majority of us are going to suffer.

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  • Uranium is not actually that abundant. There is something like 200 years supply based on current useage. Most of the supply in Europe comes from Kazakhstan. Canada has by far the largest reserves, but I guess shipping it across the Atlantic is not that easy.

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  • We aren’t just talking about oil anyway – all resources are finite and we are increasing conumption, not decreasing – metals, minerals etc. You cannot poosibly argue against addressing this without basically saying that you wish to leave the problem to future generations (your children or grandchildren) to sort out, as long as i’m alright, Jack. Nuclear power stations need built from something, the wires to transmit electricity have to come from somewhere etc. etc. The root cause is our need for expansion and growth and this is what needs addressed.

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  • planning4acrash says:

    The nuclear solution is a lie. There is only enough uranium for about another generation of powerstations and fuel will go up in prices by a lot. Apparently tens of power stations are shut only this week from lack of fuel. No, the only centralised solution would be fusion power. But fusion will not solve the fact that we rely on oil for plastics, fertiliser and pesticides amongst other things.

    And, the reason for posting this is to demonstrate that higher food prices are a structural issue linked to oil and that high oil prices feed into CPI and effect house prices.

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  • P4ac. I found the article quite interesting. I hadn’t understood the link between oil and food before. Thanks for posting it! I’m off to study the Amish way of farming now. 🙂

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  • Yes we’re expanding consumption, but we’ve been doing that for the last 10,000 years since the Neolithic Revolution when mankind shifted from hunter-gatherer to agriculture. Nobody cares whether we’ll run out of minerals in 100 or 200 years because none of us will be alive then. What matters is now, the next 10-20 years when we’ll hopefully be buying homes, raising families, and getting on with our lives. As the economist John Manyard Keynes said: “In the long run, we’re all dead”.

    The increased price of oil is already leading to higher food prices, that much is certain. MoneyWeek recently covered the story with the gloomy prediction that we could soon be spending 25% of our income on food (up from 10% currently):
    http://www.moneyweek.com/file/34907/why-25-of-your-income-could-soon-go-on-food.html
    and a recent story in the Telegraph pointed out that food prices are already rising:
    http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/10/23/nshop123.xml

    However there’s no reason to expect a food crisis caused by peak oil*, at least not within the next 50 years. As food becomes more expensive, money and oil will be diverted away from discretionary uses (ski slopes in the desert, RyanAir holidays to Spain, four-wheel-drive cars in Richmond) and into necessary uses such as food. This will lead to a fall in our standards of living but humankind won’t be dying out in the billions. Not this century at least. I’ll hedge my bets by buying a house with a large vegetable garden (when house prices fall). In the meantime, as Tttonyyy said, stop with the doom-mongering!

    (* There could still be a food crisis caused by many other things, not least crop failure, drought, floods, storms, plant disease, nuclear war, world war, potato famine, black death, barbarian invasion, locust plague, etc. This website is about predictable and avoidable economic problems, not about random “acts of God”.)

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  • Energy is everything here. It is possible to recycle almost anything, so although mineral resources are finite, it will always be possible to recycle anything provided we have enough energy to do it. As for plastics, fertilisers etc., these can always be synthesised, but again this requires large amounts of energy. The only long term solutions for our species energy requirements will be from nuclear fusion (either generated on earth, or derived from the sun), or geothermal.

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  • planning4acrash says:

    Maybe prime farmland will be the next bubble?!

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  • P4ac
    I’d rather the land was used for growing food than building unnecessary housing. But farming is not so easy now with climate change.

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  • I agree. In the event of total economic breakdown, I’d rather have a few acres of land for growing my food and making a shelter, than a few kilograms of heavy yellow metal.

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  • Didn’t Alan Titmarsh grow enough fruit and veg in his (rather large) garden to supply his family virtually all year round?

    Another good reason for rejecting the new-builds and their poky gardens. If there’s a food shortage you’ve no chance of growing much food yourself.

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  • Problem is if there is a food shortage you’ll have to guard your cabbage patch with a shotgun to keep the gangs of marauding chavs off.

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  • Mrmickey
    Or hide them among the marigolds! 🙂

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  • The cabbages, I mean. Not the dead chavs!

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  • Night.
    There are some pretty wild theories about the origins of oil, the inorganic ‘seeping up’ is only one, Velikovsky has perhaps the strangest, whereby the oil precursor rained down onto the earth following the close passage of a heavenly body (he postulates Venus!). Seems odd to me, unless you have a vested interest in claiming a non organic origin, the presence of oil in huge quantities in its source-oil shales does not need an alternative explanation.

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