Biofuels, oil, and the price of food

The New York Times has a piece which suggests some disturbing news about food prices, oil prices, and biofuels.

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.

The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter.

A startling change is unfolding in the world’s food markets. Soaring fuel prices have altered the equation for growing food and transporting it across the globe. Huge demand for biofuels has created tension between using land to produce fuel and using it for food.

I think this is likely to be a bigger and bigger story, especially as efforts to use biofuels to reduce energy imports leads to competition over land and other unanticipated consequences. Last week, it was announced the Europeans may ban some imported biofuels made from palm oil which may be contributing to tropical deforestation in places like Indonesia. So rather help reduce greenhouse gas emissions, those efforts to import palm oil-based fuels could hasten it.

The recent energy bill passed in the U.S. Congress will likely make this an even more difficult problem with the new renewable fuel standard. I have a piece for the Center for a New American Security which questions the wisdom of supporting biofuels as a remedy for climate change and America’s dependence on foreign oil.

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