Here are a few reasons as to why the world might be entering a permanent new economic reality that will not be pretty.
1. Up until sometime around the year 1800, all species (particularly ours) had little margin for error. Like all other animals we lived up to the limit of the food supply. The populations ebbed and flowed following simple differential equations bounded by the limits of supply of food and numbers of humans.
2. From around the year 1800, fossil fuel exploitation enabled us to rig the market through advances in mechanisation, production and fertilisation. This positive trend could only ever be a temporary one. It was inevitable that the population would increase to exploit this step change in maximum demand possibilities. All that has happened is that the ebbing and flowing wave has a higher amplitude and a shorter wavelength. In other words, things just happen harder and faster. Markets are exaggerated and rich/poor disparities are exacerbated to insane and ugly degrees.
3. Since around the year 1800, the population has increased from 0.8 billion to nearly 8.0 billion.
4. The high demands of 2 centuries of wealthy countries exploitative folly and the recent extraordinary demands of large, fast developing countries have applied a number of ramping functions and a number of extreme pulses to the system. Anybody who knows anything about control systems design or mathematical modelling fears such pulses.
5. Since 1960 the annualised growth in crop yields has fallen from 3.5% per year to 1.2% per year despite the use of oil based fertilisers having been increased significantly. All of this intense farming is clearly destroying the land's potential to re-mineralise itself through natural irrigation and precipitation processes.
6. Politicians and money-markets will never face up to any of the above truths.
7. From now on, price pressures and resource shortages will be a permanent feature of our lives.
All of the above contributed to the financial crisis of 2008 and the subsequent spikes in commodity prices like oil, energy, metals and foods.
Add the following list of potential tipping points to this and we could be looking at the perfect storm.
1. Events in Syria could be the most likely scenario to inflame a full scale war against Israel, in turn, dragging the whole of the middle east into turmoil.
2. It is highly likely that Israel or the USA will wage a war against Iran if Iran escalates its nuclear program.
3. Libya. Does it need an explaination?
4. As the weather warms in other middle eastern countries, more tensions, protests and revolutions are bound to occur. The tipping points have been attributed to democratic awakenings by western media groups. It is more likely to have manifested itself due to spikes in food prices. Spending on food in second and third world counties forms a much more significant share of a family's budget.
5. The tragic events in Japan and subsequent annihilation of the Fukushima nuclear industry has changed world energy policy forever. The abandoning of existing and future fission projects will add massively to the demand for hydrocarbon based fuels for energy conversion needs. The impact on one of the worlds largest economies is sending out financial shock waves across the globe. Economists will un-forget about peak-oil once more.
6. Energy expenditure in the USA has just exceeded 9% of GDP for the second time. The first time was in the summer of 2008, just before the 'global financial crisis'.
7. Austerity programs (you ain't seen nothin' yet) around the globe both nationally and locally are beginning to impact on the jobs economy. This will accelerate as the story unfolds.
8. The much talked about sovereign debt crisis is about to materialise in spectacular fashion. Who will be the first 'fall guy'? Almost certainly Greece, but much bigger names will be in the frame soon after. A tower of cards teetering. The fallout will be truly shocking.
9. The demise of the U.S dollar seems unlikely to most people but watch this space. China bought massive amounts of US treasuries over the last decade. It is now trying to dump these investments on unsuspecting world bond markets at a faster rate than it accumulated them and that was pretty damn quick.
The next few years (or months even) will be very interesting to say the least.
See you all on the other side.
Showing posts with label food. Show all posts
Showing posts with label food. Show all posts
Monday, 13 June 2011
Tuesday, 1 March 2011
FOOD MADNESS - Counting the calories
Chasing the calorie trail.
It takes 10 fossil fuel calories to produce 1 food calorie on a first world table.
An oil burning machine is used to plough a field.
That ploughing machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.
An oil burning machine is used to plant seeds.
That seed drilling machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.
The seeds are treated in a factory with germination products derived from oil.
The factory uses oil, coal and gas based energies to run.
The factory uses oil burning machines to bring raw materials to it and oil burning machines to deliver seeds to distribution centres.
These distribution centres consume oil, gas and coal based energies.
They use oil burning machines to transport their seed products to farms.
An oil burning machine is used to apply a high yielding fertiliser.
That fertiliser is derived from oil.
That fertiliser is produced in a factory that uses oil, gas and coal based energy sources.
That factory uses transportation methods and energy sources to distribute its product as the seed company.
The farms often rely on irrigated water systems.
Oil, gas and coal based energies are used to extract water from aquifers and pumped large distances using pumps that consume oil, gas and coal based energy sources.
Pesticides are used throughout the growing period.
These pesticides are derived from oil.
Like the seeds and the fertilisers, these pesticides are made in factories using oil, gas and coal based energies and are transported and distributed using oil burning machines.
The crops are harvested using a multitude of oil burning machines.
The crops are transported to distribution centres using oil burning machines.
The distribution centres use oil, gas and coal based energies.
The goods are packaged in plastics and cardboard.
The plastics are oil derived products.
Cardboard use huge amounts of oil, gas and coal based energies for their extraction, production, transportation and distribution needs.
These packaged products are transported to distribution centres using oil burning machines.
They are then redistributed to supermarkets using oil burning machines.
Millions of people collect their food from supermarkets each day using oil burning machines.
To reiterate then. For each calorie of food on a first world table, another 10 calories of fossil fuel derived energy has been used to put it there.
And finally to put this in perspective.
Each person requires around 2000 food based calories per day to maintain themselves. In power terms this equates to 2.326 KWh; about the same as an electric kettle running for 1 hour or 15 TV sets running for an hour. And given that it takes 10 calories of fossil fuel to produce and transport 1 calorie of food to your table, each person uses the equivalent of 23.26 KWh of fossil fuel energy per day. That is about twice the amount of fossil fuel energy that the average family uses each day for their domestic electricity requirements.
It takes 10 fossil fuel calories to produce 1 food calorie on a first world table.
An oil burning machine is used to plough a field.
That ploughing machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.
An oil burning machine is used to plant seeds.
That seed drilling machine and all of the raw materials in that machine were manufactured using oil, gas and coal based energies.
The seeds are treated in a factory with germination products derived from oil.
The factory uses oil, coal and gas based energies to run.
The factory uses oil burning machines to bring raw materials to it and oil burning machines to deliver seeds to distribution centres.
These distribution centres consume oil, gas and coal based energies.
They use oil burning machines to transport their seed products to farms.
An oil burning machine is used to apply a high yielding fertiliser.
That fertiliser is derived from oil.
That fertiliser is produced in a factory that uses oil, gas and coal based energy sources.
That factory uses transportation methods and energy sources to distribute its product as the seed company.
The farms often rely on irrigated water systems.
Oil, gas and coal based energies are used to extract water from aquifers and pumped large distances using pumps that consume oil, gas and coal based energy sources.
Pesticides are used throughout the growing period.
These pesticides are derived from oil.
Like the seeds and the fertilisers, these pesticides are made in factories using oil, gas and coal based energies and are transported and distributed using oil burning machines.
The crops are harvested using a multitude of oil burning machines.
The crops are transported to distribution centres using oil burning machines.
The distribution centres use oil, gas and coal based energies.
The goods are packaged in plastics and cardboard.
The plastics are oil derived products.
Cardboard use huge amounts of oil, gas and coal based energies for their extraction, production, transportation and distribution needs.
These packaged products are transported to distribution centres using oil burning machines.
They are then redistributed to supermarkets using oil burning machines.
Millions of people collect their food from supermarkets each day using oil burning machines.
To reiterate then. For each calorie of food on a first world table, another 10 calories of fossil fuel derived energy has been used to put it there.
And finally to put this in perspective.
Each person requires around 2000 food based calories per day to maintain themselves. In power terms this equates to 2.326 KWh; about the same as an electric kettle running for 1 hour or 15 TV sets running for an hour. And given that it takes 10 calories of fossil fuel to produce and transport 1 calorie of food to your table, each person uses the equivalent of 23.26 KWh of fossil fuel energy per day. That is about twice the amount of fossil fuel energy that the average family uses each day for their domestic electricity requirements.
OIL IS THE KEY.
EVERYTHING DEPENDS ON IT AND IT'S RUNNING OUT FAST.
Thursday, 3 February 2011
FOOD DEMAND = FOOD PRICES = FOOD RIOTS = CHAOS
Food prices and other commodity values have been rising considerably during the last few years and particularly since the 2008 global financial crisis.
There are several structural reasons for this which have been discussed in earlier blogs.
While in the West, we find these inflationary food prices annoying or worrying or stressful (depending on which social level you exist), it is becoming a far more desperate story for others around the world.
Here in the UK, an individuals food budget is not too significant, and we can always cut down on other things, shop around, find offers and bargains etc.
When food begins to take significant proportions of a family's budget, people begin to attach a political dimension to their concerns and this may result in protests, riots and even regime change.
Here is a list of 25 countries that like Egypt and Tunisia are finding that their food budget is getting out of control. The list shows the percentage of household income that is spent on food:
Venezuela 32.6 %
Lebanon 34.1 %
Latvia 34.3 %
Tunisia 36.0 %
Libya 37.2 %
Dominican Republic 38.3 %
Sri Lanka 39.6 %
China 39.8 %
Romania 45.4 %
Philippines 45.6 %
Kenya 45.8 %
Angola 46.1 %
Pakistan 47.6 %
Egypt 48.1 %
India 49.5 %
Bulgaria 49.5 %
Vietnam 50.7 %
Sudan 52.9 %
Algeria 53.0 %
Bangladesh 53.8%
Azerbaijan 60.2 %
Ukraine 61.0 %
Morocco 63.0 %
Nigeria 73.0 %
It's not just armies that march on their stomachs.
There are several structural reasons for this which have been discussed in earlier blogs.
While in the West, we find these inflationary food prices annoying or worrying or stressful (depending on which social level you exist), it is becoming a far more desperate story for others around the world.
Here in the UK, an individuals food budget is not too significant, and we can always cut down on other things, shop around, find offers and bargains etc.
When food begins to take significant proportions of a family's budget, people begin to attach a political dimension to their concerns and this may result in protests, riots and even regime change.
Here is a list of 25 countries that like Egypt and Tunisia are finding that their food budget is getting out of control. The list shows the percentage of household income that is spent on food:
Venezuela 32.6 %
Lebanon 34.1 %
Latvia 34.3 %
Tunisia 36.0 %
Libya 37.2 %
Dominican Republic 38.3 %
Sri Lanka 39.6 %
China 39.8 %
Romania 45.4 %
Philippines 45.6 %
Kenya 45.8 %
Angola 46.1 %
Pakistan 47.6 %
Egypt 48.1 %
India 49.5 %
Bulgaria 49.5 %
Vietnam 50.7 %
Sudan 52.9 %
Algeria 53.0 %
Bangladesh 53.8%
Azerbaijan 60.2 %
Ukraine 61.0 %
Morocco 63.0 %
Nigeria 73.0 %
It's not just armies that march on their stomachs.
Sunday, 7 November 2010
FOOD PRICE RIOTS
.
More food riots have broken out in recent weeks.
The latest has been in Egypt where food prices have more than doubled during the last 12 months.
Since February, when 40 people were killed in Cameroon, riots have spread to Mauretania, Mozambique, Senegal, Mexico, Haiti, Ivory Coast, Morocco, Uzbekistan, Yemen, Bolivia, West Bengal and Indonesia.
The media coverage of these events is poor.
The driving force behind the price riots and the people's reactions to the price rises, with the exception of perhaps Haiti, is Commodity price bubbles driven by finacial speculators who currently struggle to make money in convential bond and equity markets.
This situation can only get worse as more and more financial institions accross the globe switch their dealing strategies from stocks, shares and bonds to food and metal based commodoties and derivitives thereof.
How will governments around the globe coordinate a response to this looming ethical and financial disaster. After all, you can't print food!
Comments welcome.
More food riots have broken out in recent weeks.
The latest has been in Egypt where food prices have more than doubled during the last 12 months.
Since February, when 40 people were killed in Cameroon, riots have spread to Mauretania, Mozambique, Senegal, Mexico, Haiti, Ivory Coast, Morocco, Uzbekistan, Yemen, Bolivia, West Bengal and Indonesia.
The media coverage of these events is poor.
The driving force behind the price riots and the people's reactions to the price rises, with the exception of perhaps Haiti, is Commodity price bubbles driven by finacial speculators who currently struggle to make money in convential bond and equity markets.
This situation can only get worse as more and more financial institions accross the globe switch their dealing strategies from stocks, shares and bonds to food and metal based commodoties and derivitives thereof.
How will governments around the globe coordinate a response to this looming ethical and financial disaster. After all, you can't print food!
Comments welcome.
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