mm260: The other oil shock

January 20, 2008

MUDGE’S Musings

We’ve had several occasions in this nanocorner of the ‘Sphere©

Fuel from Food: Just a bad idea all around

mm233: Corn in the news – and not just in Iowa!
mm194: Friedman: Coulda, Woulda, Shoulda
mm193: Fuel without oil, or corn
mm084: Food versus fools – Salon.com
mm053: The case for turning crops into fuel – Saletan
mm015: Welcomed back to the guild

…to consider the growth of the use of traditional food crops to create alternative fuel stocks – ethanol from corn is the U.S. wrongheaded approach.

Such is the triumph of our interconnected world that bad ideas from the U.S. are reproduced just as predictably as are many of our other famous cultural artifacts: rock and roll, blue jeans, cellular telephones.

January 19th’s NYTimes brings to our attention the food crisis in Asia caused by conversion of food crops to petroleum substitutes.

nytimes

A New, Global Oil Quandary: Costly Fuel Means Costly Calories

By KEITH BRADSHER | Published: January 19, 2008

KUANTAN, Malaysia — Rising prices for cooking oil are forcing residents of Asia’s largest slum, in Mumbai, India, to ration every drop. Bakeries in the United States are fretting over higher shortening costs. And here in Malaysia, brand-new factories built to convert vegetable oil into diesel sit idle, their owners unable to afford the raw material.

Cooking oil? A cheap commodity in the west. What’s the big deal?

Cooking oil may seem a trifling expense in the West. But in the developing world, cooking oil is an important source of calories and represents one of the biggest cash outlays for poor families, which grow much of their own food but have to buy oil in which to cook it.

The focus of this story is on palm oil, until recently rather disreputable nutritionally here, but back in favor as an option to trans fats, increasingly seen as unhealthy, and even legislated against in trendy places like New York City.

Now, everyone everywhere wants palm oil. But as petroleum prices rise, and vegetable based oils are viewed as attractive components of biodiesel, palm oil is suddenly in short supply, and skyrocketing in price.

[Please click the link below for the complete article — but then please come on back!]

An Oil Quandary: Costly Fuel Means Costly Calories – New York Times

The interconnectedness of the world never fails to astonish. In this instance, the result isn’t merely inconveniently high prices for traditionally low-cost commodities, it’s starvation in Asian slums.

Stranger yet the instructive example of the palm oil refinery in Malaysia, built alongside sizable palm forests, prepared to convert palm oil to biodiesel. Now frantically attempting to come up with a new plan, as its machinery was idled because the demand for palm oil as food has ratcheted up its price beyond economical use as a feedstock for mere fuel.

In the rush to pander to Midwest growers of corn and soybeans by subsidizing the use of ethanol for fuel; in the rush to protect U.S. citizens from the unhealthy effects of oil their potatoes are fried in; we initiate chains of events that results in a crisis of shortages and starvation on the other side of the globe.

Farmers, always the hardest working and often the least compensated link of the food chain, naturally seek to get the highest price possible for their output, and biofuel has supercharged demand, thus prices are higher.

Seems clear that in the rush to embrace biofuels the law of unintended consequences has landed square into the battered cooking pots of Mumbai.

Can’t cook the week’s scrap of mutton with unintended consequences.

It’s it for now. Thanks,

–MUDGE

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