|
|
|
Subject:
US, Biofuel, & Economic Warfare
PowerPointRanger
5/26/2008 12:28:36 PM
|
The price of oil has more than doubled in the last 4 years. The US has little alternative but to pay, often to tyrants who use our own money to buy the weapons they use against us.
Or do we have alternatives?
The recent US expansion of biofuels may very well be our signal that economic warfare is under way. Not that the biofuel itself will reduce the price of oil. We produce too little make a meaningful impact on the oil market.
However, it does make a rather large impact on the global food market. The US has long been the breadbasket of the world, exporting food even to our enemies (e.g. the US is Cuba's primary food supplier--in spite of the embargo). As we shift more of that grain from food to fuel, it dramatically increases demand, which causes price increases. Also, grain is fungible--if you want to make tortillas, for example, and corn becomes too expensive, you can use wheat instead. So if you increase demand in one crop, it has the effect of increasing demand overall.
What does all this mean? While the price of oil (which we import) has doubled in the last four years, the value of our grain (which we export) has doubled in the last two years.
"http://www.fas.usda.gov/cmp/outlook/2008/Feb-08/02-08e.pdf"
It seems we DO have something they need.
Unless Saudi Arabia decides it needs to start growning corn in the middle of the desert.
The fact that we are using the grain for fuel sends an inescapable message: If oil weren't so expensive, we wouldn't have to use your food for our fuel.
While Americans can adapt to use less oil in the long term (e.g. use more coal, drive more fuel efficient cars, build more nuclear plants, etc...), population growth in the third world will only increase the demand for food, often at a rate beyond what the local producers can match. And we can control just how much biofuel we use. It won't hurt the princes and kings, who can afford to pay more for food. But as Louis XVI of France found out the hard way, a lack of food will make the masses very unhappy.
As for the economics of it, something has to give. Supply & demand tend toward balance. Either the price of oil will derail worldwide economic growth, causing a reduction of demand; or supply will increase to meet demand.
The economic brinksmanship has begun. |
| |
|
|
|
|
|
Latest
News |
Most
Read |
Hot
Topics |
|
|
|
