Wednesday, April 23, 2008
The latest food crisis news: Aid group to cut food ration to millions
"Though we're able to feed people, we're not feeding people as we would like, and those people we are feeding are getting less than we would like."
She cited two primary, interconnected causes: an increase in food prices and an increase in the need for food.
Wolff said the magnitude of the shortfall is unprecedented and predicted that the situation "probably will get worse as the year progresses."
"What's unique about this is that it's happening all over the world," she said.
Among the causes is the diversion of corn to the production of ethanol rather than food, she said.
The spiraling price of fuel has aggravated the problem by boosting the cost of fertilizer and transporting food.
Well, if high fuel prices are causing these problems, we can always ask our good friend, Saudi King Abdullah to increase oil production and bring prices down.
Uh, no.
In a series of statements, including one by the king himself, the kingdom has warned consumers it does not believe there is a need for further expansion, an assumption disputed by the world's biggest developed countries
In previous years the Saudis didn't want the price of oil to go too high, because it would encourage consumers to look for alternatives. Since we are now looking for alternatives, and since this food crisis threatens them too, it would make sense for them to open the taps a bit.
But they're not. The only reasonable explanation is - they can't. It's becoming obvious that they don't have the kind of oil production capacity we thought they had.
Since we were basing our estimates on what our terror-supporting allies told us (and the estimates of some guy in a little office over a grocery store in Geneva), this shouldn't be a surprise. On April 13th, King Abdullah dropped this bombshell:
"When there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'," King Abdullah said...
Saudi production capacity stands at around 11.3 million bpd, and is scheduled to rise to 12.5 million bpd next year.
The King's remarks seem to confirm a statement made last year by Saudi oil minister Ali al-Naimi who, when asked "How high can your production go?" replied, "We'll get to 12.5 million barrels a day and then we'll see."
Of this announcement, Jeffrey Rubin, chief economist, CIBC World markets says:
For years, Matt Simmons has been trying to tell the world that there was a looming oil production crisis in Saudi Arabia. For years, the KSA's friends in the State Department portrayed him as a kook.
Of Abdullah's announcement, Simmons says:
If the Sauds and other Gulf states have maxed out, they are in a very tight spot right now. People who have been living under unpopular regimes like the ones in Haiti and Egypt are rioting, mostly about food, but also about their hated leaders. The Gulf state leaders are more beloved by our government than they are by their own people.
The Gulf states are currently experiencing a tulipmania bubble. If workers apply pressure, or if they can't keep oil profits steady, their economies will crash sooner than later.
With their depleted resources, their massive support of terrorism, and the fact that their bubble is about to burst, even the most determined realist must acknowledge that if we continue this codependent alliance, we will be flushed down the toilet with them.
I know it's hard, but it is time to let go.
Food problems are not because of oil, its because of the increase in demand in indian and china for food, where the middle class in china will reach 600 million in 15 years.
its becoming frustirating that everything is because of saudia, which is a powerfull player world wide, but nit every problem is the cause of saudia.
I dont now how countries burn food for fuel then claim that other countries are he cause of food shortages.
For once I am NOT blaming Saudi arabia for the food situation. The problems are due to a number of factors, including the increased need for food in China and India, the use of palm oil and corn for biofuels, speculation on the commodities market, etc.
I believe that Saudi Arabia and other oil-producing states in the Middle East would do what they could to alleviate the problem if they could. However, I don't think they can increase production without causing long term damage to their economies because their oil supply is not what their propaganda claimed.
Gulf states are not to blame for the food crisis, but they are likely to suffer the worst consequences. Quite frankly, I think they're doomed, and I don't see any way out of this mess for them.
Our alliance with these states has always been as useful to us as a dead weight around our necks, and the current crisis is making the situation critical. If we don't break free of this alliance, we're going to go down with them.
Using corn for bio-fuel (ethanol) has been a disaster. Not only does it increase demand for oil in a tight market, but it also reduces global food supply and puts more greenhouse gases in the air as forests are cleared to grow corn. Chalk another one up to unintended consequences of big gummint mandates.
So, if we're worried about Saudi supply in the long run, why exactly aren't we drilling in Alaska or the Gulf?
If the high price of oil kicks us in the ass hard enough, maybe we'll get serious about renewable energy from (wind, sun) or longer-term solutions like producing hydrogen economically. In the shorter term, there is no alternative to oil for transportation, so maybe coal gasification and shale-oil will become competitive. We've got lots of raw material. Would love nothing better than to tell the oil sheikhs to go take a hike.
Some talking heads (Trilby Lundberg?) and even the OPEC head have been saying there's adequate supply, that market dynamics (supply and demand) account only for the price rise to about $80-85/bbl and that the $30+ gap to the current price is due to speculation and trading in oil futures and reflects concern over the weak dollar and political uncertainty.
Still shaking my head with disbelief at finding myself somewhat in agreement with Arabian.
Some talking heads (Trilby Lundberg?) and even the OPEC head have been saying there's adequate supply
Well, OPEC would say that, wouldn't they? If they admit that there's a problem, they'll lose all influence and we'll look for alternatives in earnest. So, they'll never admit that there's a problem.
The worst case scenario is:
1. the oil producing states will do everything they can to cover up the fact that their supplies are not what they used to be. If they have to hire billions of dollars worth of state department and media influence to do it, they will. They've been doing this for years.
2. Our government and all governments worldwide will continue to believe them because they've relied on this alliance for so long, they can't see any other way. We may go to war against Iran, to make our Gulf allies happy. The economy and the oil crisis will get worse. We'll borrow more from China and the dollar will be worth less than the peso.
3. We'll avoid drilling in Alaska because it will upset the left and the Saudis. They won't build the nuclear reactors we so desperately need for the same lame reason. The situation will continue to deteriorate until it reaches a crisis point, and by then we may be ready for some sort of major worldwide war. As usual, it will probably start in Europe.
It's just a bad idea to ally with one's enemies. Of course we can't trust them. We should have figured this out years ago.
hmm..or major problems could start in China?
Lastly, an issue that I am ardent about. I have looked for information of this topic for the last several hours. Your site is greatly appreciated.