Wednesday, June 08, 2005

a letter on food and energy

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this is adapted from a letter to the 'feasta'' dublin conference on food and energy.

feasta has two difficult tasks at its conference and likewise at the recent mont clare hotel seminar -

1 to come up with the right answers -
2 to convey these to the right audience.

- of these, the second is by far the more difficult.

on the question of a possible oil peak and its implications for food supplies - i have already made a couple of basic observations. if the debates are based upon fundamental assumptions that are mistaken, and go unchallenged, the subsequent discussions are a waste of valuable effort.

these observations are -

- that oil production will not peak, but will arrive at a plateau and then enter a long and irreversible contraction. (i am making no claim about the timing of this plateau)

- that oil reserves are not experienced directly by the consumer, who is only aware of them through the medium of retail prices, which are subject to the open or covert operations of cartels, and subject to geopolitical events, wars, taxation and speculation. thus the oil 'peaks' actually occur in the form of oil price spikes, and do not relate directly to current reserves, or current potential production. a ceiling on potential production, however, provides an underlying support without which this manipulation would not be quite so easy or so profitable.

- that the current deflationary global financial situation may mean that we are not going to get another oil peak as high as the 1979 record price for oil. (real price, adjusted for inflation, of about $100 in today's money.)

- that, in the absence of a war, an oil crisis might not mean high oil prices, but could result in lower oil prices in a context of a severely depressed economic environment. i e there would be cheaper oil - with many unable to afford it, and many businesses lacking the confidence to borrow - which creates money and stimulates economic activity.

- that the united states' fed has been overprotective, a recession is overdue, and badly needed, like rain in a drought - even if the tourists and the airlines don't relish it.

- that with respect to energy and food, though the statistics are yet to be backed up, it seems that domestic cooking and refrigeration use more energy than farming. both would be hit by reduced energy availability - and this means that the problem can no longer be shifted 'out there.' it is literally brought home to the consumer.

- that in discussing these things, it is vital to maintain credibility and avoid geldofism. (by 'geldofism' is meant posing in front of the problem - while personally still going for the full three courses plus coffee, brandy, and cigars.) as always, the menu tells more than the agenda.
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