Why the price of ‘peak oil’ is famine

This is the logical outcome of using fossil fuel inputs to grow food, and then turning that food into fuel.

As Evans-Pritchard points out, “energy and food have ‘converged’ in price and can increasingly be switched from one use to another,” which is just a polite way of saying that, in a time of scarcity, rich people’s ability to pay for fuel will quickly outstrip poor people’s ability to pay for food.

Why the price of ‘peak oil’ is famine

By Ambrose Evans-Pritchard, International Business Editor
The London Telegraph
February 9, 2008

Vulnerable regions of the world face the risk of famine over the next three years as rising energy costs spill over into a food crunch, according to US investment bank Goldman Sachs.

“We’ve never been at a point in commodities where we are today,” said Jeff Currie, the bank’s commodity chief and closely watched oil guru.

Global oil output has been stagnant for four years, failing to keep up with rampant demand from Asia and the Mid-East. China’s imports rose 14pc last year. Biofuels from grain, oil seed and sugar are plugging the gap, but drawing away food supplies at a time when the world is adding more than 70m mouths to feed a year.

“Markets are as tight as a drum and now the US has hit the stimulus button,” said Mr Currie in his 2008 outlook. “We have never seen this before when commodity prices were already at record highs. Over the next 18 to 36 months we are probably going into crisis mode across the commodity complex.

“The key is going to be agriculture. China is terrified of the current situation. It has real physical shortages,” he said, referencing China still having memories of starvation in the 1960s seared in its collective mind.

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