350. IS THE CURRENT FOOD CRISIS DUE TO PEAK OIL?
True to form, the peak oil doomsquad can barely conceal its glee at the recent food riots. Like our old buddy Jack from peakoil.com, who is now sporting this nifty new sig:
Dieoff - fun to watch, better with hot buttered popcorn.Some of these bottomfeeders are now trying to pretend that they predicted the food crisis. Who are they trying to kid? We all know what they predicted. They said oil would peak, and the resulting price rise would cause food prices to skyrocket due to the dependence of modern agriculture on oil for machinery, transport and fertilizer. To paraphrase Colin Campbell and Richard Heinberg: The world population rose with oil, and will decline with oil, back to pre-oil numbers.
So, is that what's happening?
First, world oil production isn't even dropping. The price of rice began to skyrocket in January of this year, when crude oil production was setting a new all-time record.
Second, although high food prices do have a small oil price component, there are clearly many more factors in play than just oil prices, and all informed commentators recognize this:
"The UN's special rapporteur on the right to food, Jean Ziegler, earlier blamed the [food] crisis on biofuels, speculation on commodities markets, and EU export subsidies."SourceAnd:
"A freakish cocktail of factors, including poor global crop yields, increased demand from the likes of China and India, and a weak U.S. dollar have made food prices soar. Yet many farmers and commodities buyers suggested yesterday that another factor has exacerbated these price increases, and incited unpredictable gyrations in the futures market: the growing clout of financial speculators, like large index funds and hedge funds."SourceIt's gotten so bad that the CFTC (Commodities Futures Trading Association -- the agency which regulates futures exchanges in the U.S.) had to convene a conference last week to address irate farmers complaining not about the surge of diesel prices, but about the surge in speculative money causing havoc in the futures markets. Havoc to a degree that farmers are having trouble marketing their product.
Prof. James Hamilton of Econbrowser also finds the feverish activity since the beginning of 2008 suspect. Regarding the current price surge, he writes:
It seems to me we should be looking for a single explanation behind the common behavior of the group, rather than try to develop a separate theory for aluminum, barley, coffee, cocoa, copper, corn, cotton, gold, lead, oats, oil, silver, tin, and wheat.Indeed, it seems very unlikely that we are suddenly running out of everything at the same time. He continues:
I also find it implausible to attribute the commodity price increase to a surge in demand. The economic news over the last three months has been very convincing that output is slowing, not accelerating.In other words, much of the price surge since Jan. 2008 is a financial phenomenon, driven by the Fed's rapid interest rate cuts. This has created negative real interest rates, causing people to flee to commodities in order to preserve value. It's the same conditions which led the Hunt Brothers to hoard silver in the 1970s. If history is a guide, the bubble will pop when the Fed pulls the trigger, and begins to raise interest rates.
Another big factor, particularly in the case of rice, is plain panic, and the hoarding induced by it.
Yes, the price of food has risen, and poses a threat to the well-being of the world's poorest people. Does this mean the doomer shitheads get to say "told you so", break out the party horns, and prematurely ejaculate on their gold hoards and nitropacked food supplies?
Well, they're probably going to do that anyway, but back here in reality... No. There isn't a die-off until the people actually die.
The current food crisis is not the die-off for a number of reasons. First of all, the currently hungry people don't need to die. They're hungry due to lack of money, and there is certainly enough money in the world to get them fed. Dog and Cat food sales in the U.S. in 2005 were $14.3 billion Source , about 20 times more money than the paltry $700 million the World Food Program now needs to address the emergency needs created by the current food crisis.
A die-off, in the strict biological sense, occurs when the environment cannot physically produce enough food to sustain the population of the species in question. Therefore, even if 100 million people starve to death due to the current crisis, it won't be a die-off. Because it is patently obvious that we can feed those people if we want to. Therefore, if they are allowed to die, it would have to be labeled as what it really is -- a "let them die off"" or "kill off" or "mass murder", not a die-off.
Furthermore, there is a whole laundry list of things which can be done to improve the situation. For starters, we can get serious, and shut down the corn ethanol scam. Beyond that, this article (and the related links, all well worth reading) in the latest Economist discuss some of the deeper structural changes which will be needed to keep everyone fed.
Also, it's not at all clear that the current situation will be bad in the long run. Low agricultural prices have caused a lot of poverty in the past, and high food prices aren't all bad -- they bring greater prosperity to farmers and the countryside in developing countries. Only time can tell whether the current situation is a catastrophe or an opportunity.