Friday, July 20, 2007

Oil, Dirt and Our Food Supply

Longtime contributor Chuck D. recently sent in a thoughtful analysis on the interplay between food supply, development, soil and oil:


"I don't know how far out you have planned this week's theme, but you might want to consider doing a segment on the insanity of our food supply system. For example, how insane is it that we:

1. Have a food chain system that in the age of peak oil financially subsidizes agricorp busnesses over encouraging the small farmer, uses high energy production and dellivery techniques (read: oil based -- fertilizers, farming equipment, food processing and delivery systems) to supply us with 3000 mile Ceasar salads?

2. Distorts the market mechanism for grain by creating an artificial demand for corn to produce ethanol. This has a number of side effects. Anything that uses corn in food production becomes more expensive, and with the ubiquitous use of high-fructose corn syrup this includes a lot of what we eat. In addition, because we now have to divert wheat to feed cattle and pigs it goes up in price, and so does our bread and pasta. And we may go through our last 6 inches of topsoil in the Midwest to do it. All so we can make a product that is at best a break-even item in terms of input of energy units required to produce it versus energy units produced by it, and, ahem... well, maybe buy some votes with this policy?

3. Find it cheaper to import basic food necessities such as wheat gluten from China instead of making it ourselves so our bread isn't hard as a rock, and then surprise, surprise... we find out it's tainted with pesticide because China doesn't have the same quality control standards we do which run up the production costs supposedly in the name of safety?

4. Have developed out of existence much of the farm land that sat close at hand outside of cities, and which traditionally supplied the people in those cities with their food. In an age of cheap gas and happy motoring, no one cared and there was too much money to be made. But in an age of peak oil it may be different. Worse, if it is different, we have both stripped away the topsoil and compacted the ground for this development. If/when the suburban model fails, we simply can't get rid of the now useless development and put it back into farming. We may end up with wasted, useless land we can't do anything with at the same time we have people going hungry in nearby cities with no way to feed them. "

Thank you, Chuck D., for these insightful comments.

Another reader earlier this year described the same issue, that soil is a resource which cannot be scraped away, covered in compressed gravel and concrete, then exposed to air and expected to grow anything useful. Like air and water, soil is a resource which a market economy cannot value correctly. I have covered this before and recommended The Tragedy of the Commons, the seminal paper by Garrett Hardin which described the failure of the market to value/price common essential assets, i.e. "the commons."



The coming shortage of oil--i.e. the gap between the limited supply and insatiable global demand--is addressed by two Wall Street Journal articles, one in April and another in July, which was sent in by frequent contributor Michael Goodfellow. (Note that an online subscription is required to read the WSJ archives, but you can read the 7/16/07 story in a library.)

IEA Warns That Low OPEC Output Is Likely to Drain Global Oil Stocks (4/12/07)

The International Energy Agency warned Thursday that output by the Organization of Petroleum Exporting Countries had hit its lowest level in over two years on production outages and self-imposed cuts, a factor likely to drain global oil stocks in the coming months.

In its monthly oil market report, the agency, the energy security watchdog for the Organization for Economic Cooperation and Development, highlighted unexpected product-led reductions in world oil stocks and what it described as "astonishing" demand growth in China, where it was forced to revise up its growth expectations for this year.

Potential Energy Crunch May Bring Other Fuels to Fore (7/16/07)

"It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50% to 60% growth in demand over the next 25 years," says the draft report, titled "Facing the Hard Truths About Energy."

"In geoeconomic terms, the biggest impact will come from increasing demand for oil and natural gas from developing countries," said the draft report, a copy of which was reviewed by The Wall Street Journal. "This demand may outpace timely development of new supply sources, thereby pressuring prices to rise."

The study, which was requested by U.S. Energy Secretary Samuel Bodman in October 2005, was conducted by the National Petroleum Council, an industry group that advises the secretary.

The conclusions appear to be the first explicit concession by the petroleum industry that it alone can't meet burgeoning global demand for oil, which may rise to as much as 120 million barrels a day by 2030 from about 84 million barrels a day currently, according to some projections.


My own study of the subject (admittedly an amateur's research) suggests petroleum output is maxed out at 85 million barrels a day. New supply only replaces what is being lost in declining supergiant fields. The idea that the earth can produce 120 million barrels a day of petroleum is pure fantasy, on the level of hoping the Martians arrive bringing a techno-miracle to save the day.

The only solution is to use the planet's remaining petroleum much more wisely and efficiently than we do now.

Michael also recently sent in this piece on a technology which would use much less oil--an example of many alternative technologies which are under development that could radically cut petroleum demand:

Radical Engine Redesign Would Reduce Pollution, Oil Consumption

For a darker view of the slide down the slippery slope of Peak Oil, I highly recommend glancing at Life After the Oil Crash. You may find it far-fetched, as it refuses to concede technological fixes will actually enable the current global industrial and transportation complex to continue on more or less "as is." This is definitely worth reading, just to spark your own thinking on the long-term consequences of Peak Oil.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:


Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative). If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.


PRIVACY NOTICE FOR EEA INDIVIDUALS


This section covers disclosures on the General Data Protection Regulation (GDPR) for users residing within EEA only. GDPR replaces the existing Directive 95/46/ec, and aims at harmonizing data protection laws in the EU that are fit for purpose in the digital age. The primary objective of the GDPR is to give citizens back control of their personal data. Please follow the link below to access InvestingChannel’s General Data Protection Notice. https://stg.media.investingchannel.com/gdpr-notice/


Notice of Compliance with The California Consumer Protection Act
This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising. If you do not want any personal information that may be collected by third-party advertising to be sold, please follow the instructions on this page: Limit the Use of My Sensitive Personal Information.


Regarding Cookies:


This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative) If you have other privacy concerns relating to advertisements, please contact advertisers directly.


Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP