Middle East unrest adds to pressure on world food prices | Jonathan Watts
If the revolts in Egypt and Libya spread further, we can expect spikes not just in oil prices – but in the cost of food as well The fate of Colonel Gaddafi in Libya and the price of a loaf of bread in Europe may not at first glance have an awful lot to do with one another. Similarly, not many people would link the fall of Hosni Mubarak with the cost of a bowl of rice in China. But the revolts in Libya and Egypt are not just driving regime change in the Middle East, they may well add to the already intense pressure on global food prices. The missing link is oil, which hit a has new two-and-a-half year high and today topped $108 (£67) a barrel due to the instability in Libya – which has Africa’s biggest crude reserves. The price is moving closer to the record levels of more than $147 (£91) , reached just before the financial crash in 2008. That will be of little surprise to car drivers, who in recent decades have grown used to the correlation between peace and conflict in the Arab world and the troughs and peaks of the price they pay at the pumps. But in the longer term, the impact may also be evident on the dinner table because the zigs and zags of oil prices are increasingly being followed by grain . Two links are apparent. First, modern agriculture is massively dependent on fossil fuels, which are used for farm machinery, fertiliser production and crop transportation. Secondly, the rise of biofuels means that many food crops are in direct competition for land with ethanol plantations. The relationship is not necessarily one-way, particularly when other climate factors are at play. The recent surge in wheat, corn and soy prices – which prompted UN warnings of approaching danger levels – was also due to last year’s dry spell in Russia and floods in Australia. The most recent increase was attributed to a drought in China that threatens the winter wheat crop. But whether it is climate change or social protest that shakes the commodity markets, the jolts appear to affect the values of both kilowatts and calories – albeit sometimes with a slight lag. Different forms of energy consumption are converging – as well as growing – thanks to a rising global population and the increasing affluence of emerging economies like China and India. That should prove food for thought as we watch the compelling spectacle of change in the Middle East. Egypt nudged prices upwards (due more to the importance of the Suez canal to tanker traffic than its own oil output). Libya, the world’s 12th biggest oil exporter at 1.1m barrels per day, adds momentum. If these countries stabilise, the impact may be limited. If the unrest spreads to bigger oil producers, such as Saudi Arabia or Iran, expect further spikes not just of oil but of food. Food Oil Energy Fossil fuels Oil Commodities Arab and Middle East protests Egypt Libya Middle East Jonathan Watts guardian.co.uk
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on February 22, 2011. Filed under News, Politics, World News.
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Middle East unrest adds to pressure on world food prices | Jonathan Watts
If the revolts in Egypt and Libya spread further, we can expect spikes not just in oil prices – but in the cost of food as well The fate of Colonel Gaddafi in Libya and the price of a loaf of bread in Europe may not at first glance have an awful lot to do with one another. Similarly, not many people would link the fall of Hosni Mubarak with the cost of a bowl of rice in China. But the revolts in Libya and Egypt are not just driving regime change in the Middle East, they may well add to the already intense pressure on global food prices. The missing link is oil, which hit a has new two-and-a-half year high and today topped $108 (£67) a barrel due to the instability in Libya – which has Africa’s biggest crude reserves. The price is moving closer to the record levels of more than $147 (£91) , reached just before the financial crash in 2008. That will be of little surprise to car drivers, who in recent decades have grown used to the correlation between peace and conflict in the Arab world and the troughs and peaks of the price they pay at the pumps. But in the longer term, the impact may also be evident on the dinner table because the zigs and zags of oil prices are increasingly being followed by grain . Two links are apparent. First, modern agriculture is massively dependent on fossil fuels, which are used for farm machinery, fertiliser production and crop transportation. Secondly, the rise of biofuels means that many food crops are in direct competition for land with ethanol plantations. The relationship is not necessarily one-way, particularly when other climate factors are at play. The recent surge in wheat, corn and soy prices – which prompted UN warnings of approaching danger levels – was also due to last year’s dry spell in Russia and floods in Australia. The most recent increase was attributed to a drought in China that threatens the winter wheat crop. But whether it is climate change or social protest that shakes the commodity markets, the jolts appear to affect the values of both kilowatts and calories – albeit sometimes with a slight lag. Different forms of energy consumption are converging – as well as growing – thanks to a rising global population and the increasing affluence of emerging economies like China and India. That should prove food for thought as we watch the compelling spectacle of change in the Middle East. Egypt nudged prices upwards (due more to the importance of the Suez canal to tanker traffic than its own oil output). Libya, the world’s 12th biggest oil exporter at 1.1m barrels per day, adds momentum. If these countries stabilise, the impact may be limited. If the unrest spreads to bigger oil producers, such as Saudi Arabia or Iran, expect further spikes not just of oil but of food. Food Oil Energy Fossil fuels Oil Commodities Arab and Middle East protests Egypt Libya Middle East Jonathan Watts guardian.co.uk
Posted by
on February 22, 2011. Filed under News, Politics, World News.
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