The rice situation vividly illustrates how groups of otherwise smart people in the aggregate sometimes harm their own interests. Overall, global hunger and food pricing have been problems of distribution, not supply, for many decades. The world produces more than enough food for 6+ billion people, but mal-distribution results in gross inequities. This is largely reflective of economic disparities, but not exclusively.

There are localities where rice is short, ability to pay is scant, and consequences are both dire and real. But this is not the case for the US. In fact, the US grows far more rice than its population consumes. We export about half the rice we grow, and we could put more land under rice cultivation. Nevertheless, last week Costco and Sam’s Club moved to limit a run on bags of rice larger than 20 lbs. because restaurant owners and bulk food buyers, along with some individuals, were stripping stores of supplies on *anticipation* (read fear) of higher prices or shortage. Yet America has a glut of rice relative to intrinsic domestic demand.

Meanwhile, in parts of India and Africa, there are local shortages or other areas where rice is priced out of reach of poor families, even it it’s at hand. Drought, weather, fuel costs and improving living standards in previously-poor areas all contribute.

Relatively small inputs can have amplified psychological effects. So while the volume of corn production for fuel ethanol doesn’t explain by itself a number and scale of grain scarcities, the marginal impact of land, time, resources and cultivation diverted from food to fuel does add price pressure.

Bio-fuels may have a legitimate place in our evolving fuel mix as we mitigate dependency on oil, but moving land out of food cultivation and into fuels — especially when doing so is water and fertilizer intensive — is foolish and unnecessary.

Farmers and (let’s separate them) agribusiness have incentives to maximize near-term return for their activities, and this sometimes leads them away from long-term stewardship of the land they use. Government subsidies encouraging corn-for-ethanol production result in land transfered from wheat or other crops to corn, plus there’s a drought in the wheat-growing regions of Australia. Now there’s a flour shortage so wheat prices are rising and some farmers are expanding wheat acreage at the expense of something else. And then there will be another “something else.” And yet in the US and EU, there remains arable land kept fallow by government policy. A little holistic thinking about the problems would offer a policy median between the harm of a state economy in agriculture, and the vicissitudes of unchecked markets of shortsighted individuals. If only.

Again, just as I have suggested in prior texts about the power individuals have for preserving the domestic auto industry or responding to climate change or managing their energy economics, once again I ask: what will you do to shape the world you want?

Wealth is the world’s greatest contraceptive. But it also tends to make people want to eat more meat. That’s inefficient from an environmental and food distribution standpoint. It takes more than 10 lbs. of grain to yield 1 lb. of beef, and considerable water. More of everything to process it safely and move it around. As an American, living in a country where food prices are, by global standards, incidental for middle-class folks, are you willing to eat less meat? Especially less corn-fed meat? Are you willing to just eat less? Are you willing to stop buying bottled water and instead go back to the tap? It’s probably cleaner water anyway. Are you willing to leave that extra couple of 20 lb. bags of rice on the pallet at Costco and take a little risk the price might be a bit higher in a month? What are you willing to do, if you believe these problems are real?

Malthus has less than 50 years left to terrorize our thoughts. After that, global population will have peaked and be in extended, gradual decline, if we are sensible and keep the wealth-generating machinery going. We will be able to grow enough food for the 9 billion global population at peak. The problem will be distribution as it always has been for the last hundred years or so.

The amount of food thrown away every day by just the restaurants in any major city in the US or EU would sharply improve the caloric requirements of some large populations in Africa, India and rural China. Add the heaps discarded by individuals and families. And the foodstuffs paid for, taken off the market, and stored by government payments, and you can see lots of ways to narrow the gaps.

As I said before, I’ll vote for any presidential candidate who will pledge to work for ending government funding of foodstuffs-for-ethanol. If we’re going to have biofuels, let it be from by-products, waste, or non-crop lands. Better yet, let’s extract untapped oil, boost clean coal, subsidize mass adoption of residential and commercial rooftop solar, go big on solar farming in our empty southwestern interior, build a continental water husbandry network, get serious about sensible uses for water, and think twice before hoarding or filling your plate to the rim. Mitigating food shortages and moderating pricing starts with each of us.

In the 1950s, the world was going to starve, but the Green Revolution of the 1960s and 1970s pushed away disaster. In the 1970s, we heard it before: energy prices will arrest or take back the gains of the Green Revolution and climate change will complete our doom. In 1975, new oil was forecast to be elusive. The world was headed from 3 billion to a nightmarish 6 billion people. We’d never be as well off again. Doom ad infinitum. But oil fell. Food moderated. Commodities slipped. Economic productivity rose. We’ve been here before, fighting a war without taxing for it, credit crunch, expensive money, weak dollar, yadda-yadda; yet ingenuity is more distributed than ever and serious science and innovation is proliferating. The export markets enlivened by a weak dollar dwarf the domestic contribution of the housing economy, by 4 to 5X. We *could* totally SNAFU the economic management task at hand, but it’s not inevitable. Let’s stop talking ourselves into a panic.

Phil

Now, somebody want to explain this away for me? Will this mean that new farmers will be created after a few years of high food prices in these countries? Does this mean that food prices will drop again? Will this polarize these poor peoples so that they are more eager to follow nutcases like Bin Laden?

I figure the high oil prices will make certain people very wealthy until the price of everything else catches up. Note that I didn’t say that oil would go back down – just that everything else catches up. Will require a decade maybe of high prices. The difference between now and the 80s will be low interest rates.

Malthusian worries about population growth are obsolete. No global overpopulation looms ahead. Before most of us are dead the most critical issue in almost all developed countries will be population decline. Not from war, disease or famine, but because not enough babies are born to maintain population levels or to prevent the average age from climbing.

And we need to understand the economics of the oil business. Most importantly, Exxon, Chevron, etc., rarely own that oil in the ground—the landowners do. And when an oil company lifts that oil, the landowners expect to get their share of the full market price for that oil. As do all others with an economic interest in what’s produced; not least government.

That said, just what is this “price of a barrel of oil,” anyway? I don’t get the impression that the big oil companies “pay” for barrels of oil — they are PRODUCING the oil. So, is this a “spot price” for what must be a tiny amount of “independent refineries” that aren’t owned by the big oil companies? Oh, I understand that this price per barrel has to do with some kind of commodity market trading, but again, “Who’s actually BUYING this stuff at those prices? Anyone?

It just seems to be so utterly, utterly ARTIFICIAL. Has the cost of pouring oil into huge oil tankers and reeling them in actually increased at all? Especially when our tax-paid military is giving those tankers the best security that “other peoples’ money” can buy?

Most of this stuff just doesn’t add up to me. Except for one very clear fact: There certainly isn’t any actual “competition” in the oil industry. Once upon a time, our leaders were “trust busters,” but that has certainly turned completely to the opposite direction, now hasn’t it?

Bullshit?

just now in (Since you guys don’t take in the good news) Brazil has “found” 2 new major oil-fields. Supposedly this will get us up to almost Iraqui proportions. Can’t wait to live in an oli emirate!!

Seriously, new oil fields are found all the time. They’re just harder to get at. But you think extraction technology is stopped? Look here to us in Brazil, we incredibly are showing the way! There are immense oil fields in the ocean floors.

Oil will come down. We just need a few scared market speculators to drop their positions, and then so will everybody else. Back to 50 to 70 bucks a barrel. With todays income per capita that is cheap energy.

With the added incentive of keeping alternative fuels viable.

Yeah, call me a dreamer.

I fully expect about 30 yrs from now, in my old age to be filling up my personal transport device with gas

And through all that our only REAL economic problems now have been caused not by oil but by too many buying houses!

What’s another double on oil? That should be nothing!

There are a lot more criteria to use to focus on for what one uses to judge ones living conditions (standard). I may find it better (overall) to give up my Bimmer and move to a Civic. As with everything else, with an increase in living conditions come the responsibility to willingly accept that this too shall pass. Sometimes for the short term better, sometimes not.

I cannot control others, they will learn these lessons themselves to some extent over the course of their lives. I need to be willing to enjoy the heck out of my living conditions and accept others have a right to come to their own conclusions.

So I do not need to worry about the economy today. I do not have a substantial ability to change it to my benefit. I have some cash, I’m aware of economic conditions to some extent. I have nothing to feel ashamed of. I have a little money, I’m a little hungry and I have shelter. I think I’ll take a shower, go get something to eat and enjoy this beautiful day. Which I am grateful for. Also I’ll explore this elaborately dynamic economy/society/landscape some more.

From this, we in other countries (including the USA) can commiserate with you about politicians who can’t seem to remember what they promise on the road during election time, and don’t seem to care.

We have McPain running for Prez blabbing about how if HE were Prez, he’d cut taxes on gas.

Deja Vu all over again by about January 2009.

Sure, most will have more in credit card debt than could ever be paid off when minimum payments are actually calculated, but that’s the “norm” now.

I’m no prude; I’m definitely behind the times myself, and I’m not expecting everyone to instantly major in research and politics. BUT, what the “typical American” seems to be doing is almost intentionally blindfolding him- or her- self from current situations. It’s so easy to get caught up in the “little things,” making the big picture way too easy to ignore.

Conspiracy theories aside about whose fault this is, there is always SOMEWHERE for ANYONE to take action, no matter the area they choose.. What happened to the protests? People asking questions? Demanding change? The heart and soul of our country is the right and ability to protest, yet all people seem to be worried about is getting a bigger, better, more expensive SUV since Joe Blow next door just “upgraded…”

I heard that the threshold to a major disruption in American habits with oil is somewhere between $4 and $5 per gallon.

Natural gas is not the answer to anything. Enron touted that and we all know what happened to them. Alberta tar sands eat up gobs of natural gas in the process of extracting the oil from the sand.

As I tell my good American buddy in WNYS, Americans need to get over the non issues (abortion and guns issues and terrorism bogeyman) and get on with the real issues (climate change, anti Americanism, oil dependence, deficit/debt (personal and federal), education, Christian fundamentalism.)

And why? Because the environmentalists won’t let us drill offshore for new oil!!

Right now, what is holding diesel to $4/gal while gasoline is slowly working it’s way to that amount? Something is maintaining the price of diesel.

Russian car purchases were up 60% last year for example. Venezuela sells gas for 25 cents/gal..
Saudi Arabia and Iran also have very cheap gas. Countries like these have high growth rates for oil consumption.

Since oil production is relatively flat, the market has to allocate what is left over for export. It does this by raising the crude price to a level where demand is destroyed somewhere.

It is destroyed first in poor countries. But as wealthy importing countries bid ever higher for shrinking exports, the price of crude must accelerate even faster because there is a lot of money chasing available supply.

This is scary stuff. Who knows how high prices will have to go when the wealthy are bidding against each other. $500?

Qwerty, well said. Nobody in the initial article above said anything about the end of the world.

Some of us have to wonder, after looking around, if it getting close to the end of the American-centric civilization.

The British managed to have a soft landing after losing their empire in/soon after 1948, but then you’ll notice that they also moved from low yield coal as a major energy source, to high yield oil which brought their standard of living up for the average working class and middle class bloke and bird.

Let us be honest. America does not have that possibility. Cheap oil is in the past and there is nothing which can easily or inexpensively replace it.

The British still had industry and self control enough to “export or die” to pay off their war debts after World War II.

Let us be honest, American cannot pay off its massive debts even by manufacturing and exporting, because we’ve exported most of these jobs, and even with a 100% tax rate on all businesses and taxpayers, it has gone past the point of being able to pay off the debts.

American very likely will NOT have a soft landing coming out of preeminence, whether it is next year, 2012, 2020, 2050 or whenever.

$225 per barrel would only one more straw on the camel’s back, whether it is the one which breaks the camel’s back, we don’t know. Yet.

Please don’t shoot the messenger if you don’t like the message. I’m no happier about it than anyone else. And those europeans who have been looking down their nose at us and some British who distained us for decades, well, you’re going to have to soon carry your own can in regards to defending your own selves with your own young men and women, and spend your own money for future wars. We won’t be able to afford to help bail you out for a third time.

Sure they have.

The western Bronze Age civilizations collapsed around 1200 BCE. The population of Greece declined by 75%. Written language disappeared for several hundred years.

After the western half of the Roman Empire fell it took nearly a thousand years for the standard of living to return to where it was before the fall. Many technologies that had been in common use had to be reinvented hundreds of years later.

The Anasazi disappeared due to climate change and environmental damage.

The Maya civilization was destroyed by climate change and hostile neighbors.

Easter Island was done in by environmental damage.

A slow build up in soil salinity caused the end of many would be agricultural societies.

If you don’t want to restrict yourself to situations of “end of the world” type destruction then you can find many many examples of downturns in fortune that reduced previously rich and powerful nations into relative poverty.

I suppose in every case there was someone saying it can’t happen here.

The problem is that they only have to be right once.

That may be – however man’s ability to screw himself royally has increased greatly over the past 100 years…

I think hoping for the best and planning for the worse is always good advice…to do otherwise, well, just wouldn’t be prudent…

You can turn coal into oil using Fischer-Tropsch.

Natural Gas can become high quality diesel via Gas-to-Liquids.

Internal combustion of hydrogen electrolyzed from wind power starts to look good.

High traffic rail corridors can be electrified.

Phil