by Michael T. Klare
from CommonDreams Website
Get ready for a rocky year.
From now on, rising prices, powerful storms, severe droughts and floods, and other unexpected events are likely to play havoc with the fabric of global society, producing chaos and political unrest.
Start with a simple fact:
It's not surprising then that food and energy experts are beginning to warn that 2011 could be the year of living dangerously - and so could 2012, 2013, and on into the future.
Add to the soaring cost of the grains that
keep so many impoverished people alive a comparable rise in oil prices - again nearing levels not seen since the peak months of 2008
- and you can
already hear the first rumblings about the tenuous economic recovery being
in danger of imminent collapse. Think of those rising energy prices as
adding further fuel to global discontent.
And many of the social stresses evident in those two countries are present across the Middle East and elsewhere. No one can predict where the next explosion will occur, but with food prices still climbing and other economic pressures mounting, more upheavals appear inevitable.
These may be the first resource revolts to catch our attention,
but they won't be the last.
At the same time, climate change, itself a product of unbridled energy use, is adding to the pressure on supplies, and speculators are betting on a situation trending progressively worse.
these together and the road ahead appears increasingly rocky.
Food prices declined in October 2008 after the onset of the global financial crisis, but that seems to have been an anomaly. The December 2010 index of global food prices compiled by the U.N.'s Food and Agricultural Organization (FAO) hit a record 215, one point higher than in the spring of 2008. (In that index, based on a "bundle" of food staples, a baseline of 100 represents average prices in 2002-2004.)
In fact, some food products,
including sugar, cooking oils, and fats, are now trading substantially above
their 2008 levels; others, including dairy products, grains, and meat, are
inching perilously close to record levels.
Of particular concern to Abbassian and his colleagues is the rising cost of corn, rice, and wheat, the staple crops of billions in many of the poorest countries.
According to the FAO, by the end of 2010 international corn and
wheat prices were already approaching their 2008 peak levels (about $260 and
$340 per metric ton, respectively).
An extreme drought and fierce fires last summer destroyed a large percentage of the wheat crop in Russia and Ukraine, while heavy flooding in India and the inundation of 20% of Pakistan damaged significant parts of the grain output of those countries.
At the same time, unusually hot and dry weather suppressed production in a number of other key farming areas. What makes the picture look so worrisome today are indications that the severity and frequency of extreme weather events appear to be on the rise.
In the past few weeks alone, several such events point the way to serious supply problems ahead. Most significant has been the unprecedented rainfall and flooding in Australia that put an area more than twice the size of California largely underwater, significantly disrupting wheat cultivation there.
Australia is one of the world's leading wheat producers. Unusually
dry conditions in the American Midwest and
Argentina have also hinted at
future problems in grain and corn output. It's still too early to predict
the size of this year's grain and corn harvests, but many analysts are
warning of a shortfall in supplies, along with sky-high prices.
But climate change theory has long suggested that the warming trend - 2010 tied 2005 for the 'warmest' year on record and nine of the 10 warmest years have come in the last decade - will be accompanied by an increase in the frequency and severity of storms.
It's hard to escape the
conclusion that recent events, including those Australian floods, are tied
to rising global temperatures.
Partly in response to the diminishing value of the dollar, some investors are sinking their money into food futures (along with gold and silver) as a speculative hedge. At the same time, the price of oil is edging toward the $100 mark, making it increasingly profitable for farmers to switch from growing corn for human consumption to growing it for the manufacture of ethanol, which in turn reduces the amount of farm acreage devoted to staples.
Oil would have to fall below $50 per barrel to make the
cultivation of corn as a food product competitive with ethanol production - and that's not likely to happen. So even if more corn is produced this year,
less will be available for food purposes and the price of what remains is
bound to rise.
A few are even talking about the $150 barrel and gas prices at the pump of $4 or more.
If prices climb above $100, global consumer spending could take another nosedive.
As with food, the rising cost of oil is a product of growing demand, insufficient supplies, and speculative investments.
According to the
recent projections from the IEA, daily global oil consumption in 2011 will
average 87.4 million barrels, an increase of about two million barrels from
the first quarter of 2010. Much of the extra demand is coming from China,
where a newly-minted middle class is
buying automobiles at a record clip, as
well as from the United States, where previously cautious consumers are
slowly returning to pre-2008 driving habits.
United States, for example, much hope was placed in oil exploration in the
deep waters of the Gulf of Mexico and offshore Alaska, but in the wake of
the BP disaster, this seems like a forlorn prospect. Production in Mexico
and the North Sea, two bright spots of recent years, is facing a sharp
decline, while other
key producers, including those in the Middle East, are
struggling to maintain current output levels at existing fields.
combined with insatiable demand, is driving prices skyward.
Now, they're coming back.
Most analysts are expecting a price surge this spring or summer when American motorists hit the road.
The rising price of gas will, in turn, hurt consumers just as they show signs of opening their wallets again.
No less worrisome, oil-importing
countries like the United States, Japan, and many in Europe will face
soaring bills for fuel imports, further enfeebling economies already
suffering from profound weakness.
Europe had to cough up an additional $70 billion for imported oil and Japan $27 billion.
Rising food prices leading to riots, protests, and revolts, mounting oil prices, mammoth worldwide unemployment, and a collapsed recovery - it looks like the perfect set of preconditions for a global tsunami of instability and turmoil.
Events in Algeria and Tunisia give us just an inkling of what this maelstrom might look like, but where and how it will next erupt, and in what form, is anyone's guess.
A single guarantee: