Monday, September 10, 2012

Positive feedback between Food and Energy prices

The plot below compares the evolution of the monthly Food Price Index to that of the monthly Energy Price Index. The data were taken from the site Index Mundi. Descriptions:
  • Commodity Food Price Index, 2005 = 100, includes Cereal, Vegetable Oils, Meat, Seafood, Sugar, Bananas, and Oranges Price Indices
  • Commodity Fuel (energy) Index, 2005 = 100, includes Crude oil (petroleum), Natural Gas, and Coal Price Indices
Food price index compared to Energy price index
It is well known that agricultural production consumes large amounts of energy, therefore energy price constitutes a large fraction of food prices. Note excellent correlations between variations of the two indices.

We also note that since around the year 2000, when the drive for renewable energies and green fuels started on a large scale, both energy and food prices are following an exponentially growing trend. The growth in energy prices is caused by various political measures aimed at introducing renewable energies, which are much more expensive (200% to 900% difference) and have to be heavily subsidized. This growth automatically drives the food prices up. The production of green fuels, which in some cases uses up to 25% of the currently produced foods, is another factor that is driving up the food prices, by increasing demand. The positive feedback mechanism between food and energy prices acts via green fuels: more expensive foods result in more expensive green fuels, which in turn make foods even more expensive. This positive feedback acts since the year 2000.

Complementing our reasoning presented in an earlier post, it is not only green fuels that kill people by starvation, but also the renewable energies. What we need is cheaper energy and cheaper food, and not the other way round. Therefore, recalling our posts on climate issues that demonstrate the lack of ecological justification for renewable energies and green fuels, the sooner we drop these useless projects, the lower will be the number of people dead from starvation in African and other poor nations.

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