15. FOOD VS. PETROLEUM PRICES
PEAK OIL MYTH: Increasing fuel prices make food prices go through the roof.
REALITY: Here's a graph which should help clear things up for you folks (click on the image for a clearer picture):
This graph shows corn prices (red), and an index of average refinery product prices, obtained from Statistics Canada (green). Currency values are adjusted for inflation, and given in Canadian dollars.
As you can clearly see, rising petroleum prices do not make corn more expensive.
From the report:
"Average corn and petroleum product prices moved in parallel until about 1974. However, petroleum prices jumped dramatically thereafter, while corn prices did not. The real price of corn has trended downwards since 1974. This is not true for petroleum prices. The results of statistical analyses show that the average corn price has declined at an average annual rate of about 11 cents/bu, since 1956, in 1994 currency. The average petroleum price index (adjusted to 1994 values of the consumer price index) has increased at an average annual rate of 1.45."
In the period from late 1998 to April 2004, the price of crude oil increased from about $10 to $55. That's an increase of 5.5x.
So did grain prices go up by 5.5x?
Let's take a look:
Wheat prices... Steady
Soybean prices... Steady
Sugar prices... Steady