Food Prices Are Driven By Oil Prices

Tuesday, July 5, 2011

The following was published in the Opinion Pages of the New York Times for July 3rd, 2011, in a section entitled, Is Ethanol a Solution, or a Problem?

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To the Editor: I disagree with Steven Rattner’s argument that the corn ethanol program is responsible for rising food prices. Food prices are being driven by oil prices. This can be seen by noting that the price of corn shot up to $7 per bushel in 2008 simultaneous with the run-up in the price of oil to $140 a barrel; it then crashed to $3 per bushel in 2009, when oil dropped to $40 a barrel; and it has since come back up, tracking the price of oil. The prices of wheat and other grains have followed the same pattern, as has the price of fish.

Despite the ethanol program, American corn exports have not missed a beat. More important, because of the ethanol market, investments have occurred in new techniques that have increased average American corn yields from 120 bushels per acre in 2002 to 160 bushels per acre today, with some farms approaching 300 bushels per acre. These advances will help feed the world for decades to come.

There may be famine in many places globally this year. But this is because of the regressive tax on the world economy imposed by high oil prices. This needs to be eroded by competition from alternative fuels. Ethanol helps achieve that goal.

Golden, Colo., June 26, 2011

The writer is the author of “Energy Victory: Winning the War on Terror by Breaking Free of Oil.”

Read more: Agriculture is Not a Zero-Sum Game.


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