Wednesday, 15 October 2008

Fuel for Poverty

It was in back in 2007 when President Bush and the left-of-center Brazilian President Luis Inacio Lula da Silva, proclaimed a partnership between their countries in order to promote the use of biofuel as a source of alternative energy.

That was an amazing turn of events, considering the fact that the American administration never had the best of relationships with governments that come from the left side of the political spectrum. Even more amazing was the fact, that George W. Bush, a person whose political career revolves around petroleum, would support partnerships involving alternative sources of energy.

It seems that President Bush was a strong supporter of the “development and production of fuels and automobiles that would decrease the use of oil” way before his visit to Brazil. 1

The consequences of this sudden interest on the future of the environment were extremely worrying. The prices of agricultural products rocketed, violent riots erupted in many of the underdeveloped countries and a climate of insecurity struck masses of people that already lived in abhorrent conditions.

There are unconfirmed rumors that the increasing production of biofuel was responsible for 75% of the total increase in food prices. The correlation between biofuel production was described in the best way possible in the articles that follow, both by C. Ford Runge and Benjamin Senauer.

How Biofuels Could Starve the PoorC. Ford Runge and Benjamin Senauer

From Foreign Affairs, May/June 2007

Summary: Thanks to high oil prices and hefty subsidies, corn-based ethanol is now all the rage in the United States. But it takes so much supply to keep ethanol production going that the price of corn -- and those of other food staples -- is shooting up around the world. To stop this trend, and prevent even more people from going hungry, Washington must conserve more and diversify ethanol's production inputs.

C. Ford Runge is Distinguished McKnight University Professor of Applied Economics and Law and Director of the Center for International Food and Agricultural Policy at the University of Minnesota. Benjamin Senauer is Professor of Applied Economics and Co-director of the Food Industry Center at the University of Minnesota.....

How Ethanol Fuels the Food Crisis

C. Ford Runge and Benjamin Senauer

From - author update, May 28, 2008

Summary: Runge and Senauer's update to their May/June 2007 essay ''How Biofuels Could Starve the Poor.''

In the year since the publication of our article, "How Biofuels Could Starve the Poor" (May/June 2007), the average price of corn has increased by some 60 percent, soybeans by 76 percent, wheat by 54 percent, and rice by 104 percent. What at first seemed alarmist has turned out to be an underestimate of the effects of biofuels on both commodity prices and the natural environment. These price increases are substantial threats to the welfare of consumers, especially in poor developing countries facing food deficits. They are especially burdensome to the rural landless and the urban poor, who produce no food at all. Josette Sheeran, the Executive Director of the World Food Program, calls this a global "tsunami of hunger." Robert Zoellick, President of the World Bank, estimates that there are 100 million newly poor and hungry people as a result of rising food prices.....
C. Ford Runge is Distinguished McKnight University Professor of Applied Economics and Law at the University of Minnesota. Benjamin Senauer is Professor of Applied Economics at the University of Minnesota.


johnsmith said...

Fuel poverty is defined as when a household spends more than a tenth of its income on utility bills. The consumer group Energywatch said yesterday there are now about 4.4 million of these in the UK, with just over 3 million in England alone.


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