The cost of imported food, particularly wheat, has risen, partly because of the relatively smaller harvest, and partly because the cost of production and transport is rising because of rising oil prices. Figure 1 shows the close relationship food prices and oil prices. The Food Price Index used in this graph is the FAO’s Food Price Index related to food for export; Brent oil prices are spot prices from the EIA.

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Figure 1. World food price trend is similar to Brent oil price trend.


With oil prices higher now (because world production is close to flat, and as countries come out of recession, they want more), food prices of all types are higher as well. Oil is used directly in the production of grain and indirectly in storage and transit, so its cost becomes important.


Figure and text from: The Oil Drum

http://www.theoildrum.com/node/7425


 


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    Oil Prices


    In mid-2004, oil prices increased from the range of $20 - $40 per barrel to $60 - $80+ per barrel. The current global economic crisis was triggered in part by the oil price shock starting in 2007 and culminating in the summer of 2008. When prices increased from around $80 per barrel to $141 per barrel by the summer of 2008. The global economy crashed within months in the autumn of 2008. This economic crisis will likely accelerate and become more volatile once oil prices exceed around $85 per barrel for an extended time. Demand destruction for oil may be somewhere above $80 per barrel and below $141 per barrel. Economic recovery (i.e., business as usual) will likely exacerbate the global recession by driving up oil prices.

    Author

    Tariel Mórrígan earned his B.A. in Physics from the University of California at Santa Barbara. He received his Master in Environmental Science and Management (MESM) from the Donald Bren School of Environmental Science and Management at UC Santa Barbara, where he specialized in climate change, conservation, and political economics. Mórrígan is currently the principal research associate of Global Climate Change, Human Security & Democracy (GCCHSD) and a member of its Global Academic Board. His most recent publication is Peak Energy, Climate Change, and the Collapse of Global Civilization: The Current Peak Oil Crisis.

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