Tuesday, July 1, 2008

biofuels vs food, red herring

Let's try to put a few things to bed on this particular issue.

We keep hearing over and over again that:

  1. There is a shortage of oil supply
  2. The increase in the price of food is partly resulting from food being used for fuel

On point 1:

Back on March 5, (2008) President Bush said, and I quote:

"It should be obvious to you all that the [gasoline] demand is
outstripping supply, which causes prices to go up."

Now, according to Exxon (as of April 1 (heh) 2008) CEO Rex Tillerson publicly stated;

'The record run in oil prices is related more to speculation and a weakening dollar than supply and demand in the market.' He added, 'In
terms of fundamentals, fear of supply reliability is overblown.'"

Okay. further there is a lot of talk about OPEC being the bad guy here, as they are 'in control' of the worlds oil markets, being that they control a lot of the supply (the demand for which, is dropping by many, if not all measures, not growing).

However, OPEC got knocked off the top of that hill back in '83 when NYMEX started trading oil futures. To quote Ali al-Naimi;

"Oil markets are complex and not subject to control by anyone. Even Saudi Arabia and other members of OPEC with their vast reserves have only a limited ability to keep prices in their preferred range. This is
particularly true when the primary factors driving prices are things other than the supply and demand of crude oil in international markets. This is the case today. Supplies are readily available. Any buyer or seller of crude oil will tell you this. Rather, prices are being driven by other factors including fears of instability in key oil-producing countries and regions, the movement of large investment funds into communities like oil, just in time inventory practices, refining bottlenecks and the industry's struggle to produce sufficient quantities of spec gasoline in the U.S. that meets
currently mandated environmental standards. ... OPEC is only one factor that impacts oil prices and the higher crude oil production does not guarantee that there is more gasoline available for U. S. consumers."

And he would know.

On Point 2:
Vandana Shiva, who is about as clueful as anyone on a very wide range of issues, has even bought into this talk about food being diverted for fuel.

In her essay The Food Emergency And Food Myths she states (in an otherwise spot on report)

"This story might succeed in diverting US political debate away from the role of US agribusiness in the current food crisis, both through speculation and through the hijacking of food into biofuels, and in presenting economic globalisation as having benefited Indians, but the truth is that President Bush's statement is false on many counts."

Yes, President Bush is wrong and false on many accounts. Yes, this debate is in part about diverting debate away from the role of agribusiness (multinational, not just US) but the 'hijacking of food into biofuels" is a red herring.

In recent years, the US frankenfood agribusiness has achieved enormous yields of 'feed corn'. Now, this corn, #2 yellow, is only food in an abstract sense. It isn't edible. It is used as feed stock of feeding lots. We could go on and on about what a bad idea this whole approach is, but at the end of the day, this stuff isn't directly food. It's starch, and the fact that folks use it to make ethanol isn't taking food out of anyone's mouth. It isn't food.

Debate the relative values of growing #2 yellow in the first place, that's fine. But arguing about feeding people with an industrial raw material, is almost preposterous.


Shiva's essay is excellent. I was just singling out that particular bit as an illustration of how widespread is this point of view. I concur with her on her overall point.

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