What Raises Food Prices the Most

Friday, October 5, 2012

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Thirty percent of the cost of food is for energy, mostly petroleum. Less than one percent of the cost of food is the actual cost of the food. A box of cornflakes, for example, has seven cents worth of corn in it. The rest of the cost is for packaging, shipping, advertising, etc.

Since oil has such a significant impact on food prices, giving petroleum some competition and thus forcing OPEC to lower the world price of oil would have an enormous impact on food prices.

In other words, the best way to lower food prices might be to increase the use of alternative fuels. Decreasing it, as some suggest, would only strengthen oil's monopoly on the fuel market, making us even more vulnerable to the oil shocks of the recent recession that sent both oil prices and food prices through the roof.

Read more: Everything is Up, But Corn is Up Because of Ethanol? Get Real.


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