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“This is the first age that’s ever paid much attention to the future, which is little ironic since we may not have one”. -- Arthur C. Clarke

On the eve of World War I, First Lord of the Admiralty Winston Churchill made a historic decision to shift the power source of the British Navy’s ships from coal to oil. Since Churchill’s decision, energy security has repeatedly emerged as an issue of great importance and it is so once again today. Since Churchill’s day, the key energy security has been diversification. This remains true even today but a wider approach is now required that takes into account the rapid evolution of the global energy trade, supply chain vulnerabilities, terrorism and the integration of major new economies into the world market.

Human beings, like all other animals draw their energy from the food they eat. Food is energy and it takes energy to get food. These two facts, taken together, have always established the biological limits to human population and will continue to do so in the future also. Until the last century, all of the food energy available on this planet was derived from the sun through photosynthesis. As solar energy also has a limited rate of flow into this planet, it set a limit on the amount of food that could be generated at any one time. With massive population growth in the last century, the need to expand agricultural production was one of the motive causes behind most of the wars and conquests in recorded history. Even to this day, land owners and farmers fight to claim still more land for agricultural productivity.

As agricultural output could expand no more by increasing acreage, new innovations made possible a more thorough exploitation of the acreage already available through mechanization of agriculture, and that is where “oil” seeped in to farmlands.

In the 1950s and 1960s, agriculture underwent a drastic transformation commonly referred to as the Green Revolution. The Green revolution resulted in the industrialization of agriculture. The energy for the Green Revolution was provided by fossil fuels in the form of fertilizers (natural gas, naphtha) and pesticides (oil). The modern, commercial agriculture miracle that feeds all of us is completely dependent on the flow, processing and distribution of oil. Without timely and expensive inputs, yields of all basic food crops would plummet as from farm to plate, the modern food system relies heavily on oil…

  • Diesel is critical to run the tractors, combines, harvesters, equipment that plants and sprays the pesticides, and other farm vehicles which transport food and seed;
  • Food processors rely on the just-in-time (gasoline based) delivery of fresh and/or refrigerated food;
  • Food processors rely on the production and delivery of food additives including vitamins and minerals, emulsifiers, preservatives, coloring agents of which, many are oil based and delivery is also oil dependant;
  • Food processors rely on the production and delivery of boxes, metal cans, printed paper labels, plastic trays, glass jars, plastic and metal lids with sealing compounds, almost all are oil based;
  • Delivery of finished food products to distribution centres is oil based. Daily, just-in-time shipment of goods to grocery stores, restaurants, hospitals etc. are all oil based. Even customers drive to grocery stores to shop for supplies, and dining out is also dependent on oil.

To give the readers an idea, production of one kilogram of nitrogen for fertilizer requires energy equivalent of from 1.4 to 1.8 litres of diesel oil. In a very real sense, we are literally eating fossil fuels. The past half-century has witnessed a tripling in world grain production from 631 million tons in 1950 to 2,029 million tons. Similarly world fertilizer use has increased dramatically since the 1950s. China is now the top consumer with use rising beyond 40 million tons.

The Growing Oil & Food Crisis

Hence, our food supply, and our economic survival as a whole, depends on the steady availability of reasonably priced oil. Oil is the Achilles Heel of the modern food system. Food is energy and it takes energy to get food. These two facts, taken together, have always established the biological limits to the human population and always will. The UN Secretary General has already issued a gloomy warning that the burgeoning global food crisis, in which rapidly rising prices have triggered riots and threatened hunger in dozens of countries, “… could have grave implications for international security, economic growth and social progress.” Food riots have already broken out in Indonesia, Haiti, Egypt and several other African countries. The Bangladeshi Army is ordered to march on potatoes rather than rice. The daily food menu now includes 125 grams of potato for each soldier in a country where rice is overwhelmingly the staple dish.

Some of the facts of rising oil prices are like Dracula. You can shoot them dead, but they just keep getting out of the coffin. As energy gets more expensive, food will get more expensive. As per World Bank estimates, food prices have risen by an average of 83% in the past three years. A range of factors has been blamed including poor harvests, climate change, trade restrictions (exports ban), changing food habits in developing countries but major reasons cited for steep increase are mainly two:

  1. Rising Oil Prices, and
  2. Dash to produce biofuels for motoring at the expense of food crops.

Nobel Prize winner for Economics and former World Bank Economist Mr. Joseph E. Stiglitz has also advocated and observed that biofuels are a major culprit for rising food prices. He observes that “the whole system is affected by this very large withdrawal of agricultural output that was going into food production.”

Biofuels: The Magic Brew

In the early days of the automobile, it was an open question which fuel source would power future cars. Proponents of both fuels (oil and ethanol) lobbied for tax incentives. Gradually, as more and more wells were drilled and the price came down, oil won. Now with the price of oil going up, up and only up with the upper limit unknown and unpredictable, the ethanol lobby is back in action and is gaining popularity the world over.

Ethanol and methanol have the potential to supplement or replace gasoline, produced through a process of fermentation by which sugars are changed to alcohols by yeast. Another potential fuel comes from plant and seed oils. Sunflower oil, Jhatropa oil, etc. are being researched / implemented to replace diesel fuel. Oil seeds found in many plants can be processed to produce oil composed mainly of carbon and hydrogen that in turn reacts with oxygen to produce carbon-dioxide, water and heat.

As the burgeoning ethanol industry is consuming 10 to 15% of the nation’s crop, it has led to a steep rise in food prices. Ethanol is now taking a tumble. Once hyped as a “magic brew” for reducing both oil addiction and global warming, alcohol made from corn kernels is now being accused both of triggering a global food crisis and doing more ecological harm than good. The use of food crops for biofuels is one of the key factors driving a dramatic increase in the global price of cereals. The world is facing the most severe food price inflation in history.

From 1990 to 2005, world grain consumption, driven largely by population growth and rising consumption, climbed an average of 21 million tons per year. Then came the explosion in demand for grain used in ethanol distilleries. Historically the food and energy economies have largely been separate, but now with the construction of so many fuel ethanol distilleries, they are merging. If the food value of the grain is less than its fuel value, the market will move the grain into the energy economy. Thus as the prices of oil rises, the price of grains also follows it upward trend.

A team of economists has calculated that with oil at $50 a barrel, it is profitable to convert grains into ethanol as long as price is below $4 a bushel (a bushel of corn weighs 56 pounds), but with oil at $140 a barrel, distillers can pay $10 a bushel for corn i.e. double the early 2008 price of $5 per bushel.

Unfortunately for the planet, there is no effective replacement of Oil. We need to assess how much energy is returned for the energy invested (EROEI). As per statistics available, the return on energy employed in case of Ethanol and Vegetable Oil is zero, or sometimes even negative. Claims that cars can run on vegetable oil and/or ethanol never take into account the amount of energy necessary to generate the vegetable oil and/or ethanol that includes farming, transportation, extraction, storage, etc.

In addition to above, according to a just released study concludes that while there is a future for a sustainable biofuels industry, feedstock production must avoid agricultural land that would otherwise be used for food production. According to the study, the displacement of existing agricultural production, due to biofuel demand, is accelerating land-use change and, if left unchecked, will reduce biodiversity and may even cause greenhouse gas emissions rather than savings. A slowdown will also reduce the impact of biofuels on food commodity prices, notably oil seeds, which have a detrimental effect upon the poorest people.

The World Bank reports that for each 1% rise in food prices, calorie intake among the poor drops 0.5%. Projections show that the number of hungry and malnourished people climbing to 1.2 billion by 2025. Governments around the world will have to trade-off between the acreage for allocation of land for growing “fuel crops”. Biofuel policies need to require the utilization of feedstock that does not cause a net additional pressure on current agricultural land. It is time to review subsidy granted to units converting food into fuel.

It is worthwhile mentioning here His Excellency President Mahinda Rajapaksa’s vision during the recently held World Food Summit in Rome wherein he declared an integrated national drive called ‘Api Vavamu Rata Nagamu’ meaning ‘grow more food towards prosperity’, through which all arable lands in the country are being brought under cultivation. He further declared “… in the prevailing competition between food and fuel, Sri Lanka is firm in the decision that no land that can be used for food will be used for bio-fuel whatever the commercial attraction may be. It is our belief that food for the people should have the highest priority and not the running of gas guzzling vehicles”. A similar foresight is required by the leaders all over the world to help kill this Dracula once and for all.
 

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This article has 12 comments:

  •  
    I have invested in a working algaeic biodiesel farm. All their stock does is go down :-(
    2008 Oct 07 12:36 AM | Link | Reply
  •  
    Thankyou for your fantastic article, food for thought most certainly. The quest for alternative fuels will continue, it will be a challenging time with the emissions trading scheme coming into action, weighted by comments made by financial regulator and government bodies opposing speculation claiming that trading is driving up oil prices. For now whilst demand is low due to the lack of liquidity for developments etc, the price will stay lower. I can see once the smoke clouds clear and it is business as usual, we will back back to the commodity super cycle, then the alternative fuels will be fresh in everyones minds once again. (nz)
    2008 Oct 07 05:55 AM | Link | Reply
  •  
    lord fisher in 1902 advocated the construction of oil-fueled dreadnoughts which provided a performance advantage over all other navies (coal-fueled). therefore a source of oil was required, as well as control of the sea lanes to get the oil to britain. this led to the formation of the anglo-iranian oil co. (today called BP). once this process of dependence on overseas supplies was set in motion, the dominoes keep falling.......
    > jack
    2008 Oct 07 08:34 AM | Link | Reply
  •  
    While the increased cost and stagnant supply of oil available to the world is cause for alarm, it's not the end of civilization. It's the time it takes us to convert to other sources of energy that are causing such economic dislocations, which are temporary.

    Take the U.S. for instance. We have a 100+ year proven, recoverable supply of oil's cousin, natural gas, at our disposal. And a virtually unlimited supply of NG's nephew, gas hydrates, available after that.
    It's also cheaper, more abundant, environmentally friendly, secure, and lends itself seemlessly to transportation, unlike any of the so-called alternative sources of energy.

    We will only have an energy crisis if our government continues to adopt misguided, stupid, centralized energy policies. Even then, as Dr. Stiglitz and PM Churchill would surely concur, the markets will find a way to overcome such unwise attempts at intervention on their own eventually.
    2008 Oct 07 11:44 AM | Link | Reply
  •  
    Praveen: what is your basis for "demand" in your table?
    2008 Oct 07 11:57 AM | Link | Reply
  •  
    I'm sure this piece might be technically correct from a limited perspective, but I'm always suspicious when someone from the oil industry (read Praveen's bio) does not apply the same EROEI criteria to oil drilling and pumping. This is only one side of the story.
    2008 Oct 07 02:04 PM | Link | Reply
  •  
    Great article. When faced with the choice between plug in electric vehicles and biofuels for ICE vehicles, I would thintk the oil industry would be proponents of the latter. Does anyone know what percentage of BP profits come from drilling and refining vs. retail sales? Do they profit from selling E85?
    2008 Oct 08 11:41 AM | Link | Reply
  •  
    FYI: Here is another interesting study (greencarcongress) in the case against ethanol:

    Karsten Hedegaard, Kathrine A. Thyø, and Henrik Wenzel (2008) Life Cycle Assessment of an Advanced Bioethanol Technology in the Perspective of Constrained Biomass Availability. ASAP Environ. Sci. Technol., doi: 10.1021/es800358d
    2008 Oct 08 11:52 AM | Link | Reply
  •  
    Superb article Papa
    2008 Oct 08 12:12 PM | Link | Reply
  •  
    This article is just another in the form "The sky is falling and there is nothing we can do as long as nothing changes". But things can change.

    There are a great number of technical (i.e. chemistry, biology et.al.) errors of assumption in this article. While I can't address them all, I can give pointers to a few.

    Ethanol from sugarcane has a net 8 to 1 energy gain. Brazil has lots of acreage available to produce more sugarcane. While energy gain from corn kernels is only about 1.36 to 1, the leftovers (distillers grain) contains more protein and is still fed to cattle. U.S. grain used for ethanol would NOT have gone onto peoples dinner plates. It's field corn, not sweet corn, and is fed to animals. The animals still get the DDG (distillers dried grain) just minus the starch and with added protein.

    The shortage of rice in asia has NOTHING to do with ethanol. Rice is not converted to ethanol in the factories of the U.S.A. It had much more to do with a Bayer corp contamination of rice foundation seed stocks with GMO (frankenseed) genes. This caused US exports of rice to be blocked in many countries (and the the US was a major exporter). Instant rice shortage. (Plenty at my local US grocer at low prices due to excess supply in US that could not be exported... as long as you don't mind eating mystery genes...)

    Yes, AT PRESENT ag is dependent on oil. Only because oil has historically been dirt cheep. There are literally dozens of alternatives to oil that are economical in the $50 to $80 / bbl of oil range.

    Coal to liquids (several technologies) as done by Sasol, Rentech, Syntroleum, and Synthesis Energy corp (tickers SSL, RTK, SYNM, SYMX) who can also generally use their processes with non-coal carbon sources. There is about a 200-400 year supply in the U.S.A. The same processes can be used with trees (some produce about 50 tons / acre per year...).

    A couple of these folks are using trash as a feed stock. We are not at risk of running out of trash any time soon. I see enough 'yard waste ' hauled away from my neighborhood each week to power all our local cars. A demonstration plant is in operation in Los Angeles.

    There are a few dozen ways to put natural gas in your fuel tank (See CLNE) along with making gas to liquids plants (as being done by BP, COP, MRO, CVX, etc.). The supply runs to 100+ years.

    There are a few lifetimes worth of energy in the tar and oil sands of north america (see SU, IMO, RDSA, XOM, et.al. operations in Canada).

    And when it comes to biofuels, there are dozens of alternatives that produce large tons per acre without touching food plants. See PSUD, OOIL, GGRN and several private companies. We can grow enough oil for all the needs of the U.S.A. in a land area about the size that we presently use for sewage treatment and coal electric generation. You get an order of magnitude or two more tons / acre out of algae than from other 'crops'.

    Don't like algae? Try trees. Cold regions can grow poplars and warm places eucalyptus at about a 50 tons/acre yield.

    Why don't we do this? Look at the price of oil. $63/bbl and dropping. Hard to get financing when your biz model can blow up every time a very price inelastic commodity has a price break down.

    BTW, There is no energy shortage AND there never will be.

    Why? A cleaver Japanese scientist found a way to extract Uranium from sea water at about $100/lb using adsorption by a polymer mat. The quantity of U needed to run EVERY energy use on the planet is less that erodes into the ocean each year from granite and similar rocks. We run out of energy when we run out of planet. And this ignores the mountains of Thorium available for use in reactors (more than U). See stock ticker THPW for it's technical reality.

    Don't like nuclear? The area needed to power the U.S.A. using solar power is about 150 miles by 150 miles. This would disappear into any one of a half dozen deserts of the American southwest. An area of about 100 sq. miles of ocean would power all of California with wave power. Wind power needs a slightly larger land area, but cows can still graze under the windmills and actual land consumption is very small. It is presently price competitive.

    The list goes on. When it takes a small fraction of your land area to power all of your needs, there is no energy shortage. There is a 'cheapness' shortage.

    So what do we have? Yet another 'doom and gloom end of life as we know it man is destroying the planet' article driven by a short term uptick in a price inelastic cheap energy source when we have more alternatives than we could ever use.

    Look, I like scary stories as much as the next guy and people do have a natural tendency to panic and paranoia, but: The world is not ending. We are not destroying the planet. There is no energy shortage. We can grow plenty of food for everyone. and Yes, technology can fix it (whatever "it" is) is we so choose. We've just chosen to be lazy and buy oil rather than get off our butts and do something else.

    The problems with food are not limits of production capacity; they are limits of distribution, politically bogus decisions, and rich people eating animals (that take 5 to 10 lbs of grain per lb of meat) while poor people need a single pound of grain.

    The problems of energy are not limits to oil; they are volatile oil prices periodically driving the alternatives out of business. Put an $80/bbl of oil minimum price on imported oil and there would be a price sheltered area that would make so many alternatives bloom it would make your head spin. We have no energy shortage, we have a shortage of low cost STABLE priced motor fuels.

    2008 Oct 27 04:12 PM | Link | Reply
  •  
    Oh, and I forgot to mention that we can make ANY 'petro' chemical out of coal, trees, sugarcane, whatever.

    We used coal to make synthesis gas long before oil. Eastman Chemical still does (EMN) for it's polymer needs. In Brazil Braskem (BAK) is using plant sources as are several other companies around the world.

    The argument that we need oil to make synthetic chemicals is seriously broken. In the US most chemical producers use natural gas. Any carbon source can be used. We'll just swap to whatever is the cheapest in any given area. Oil is completely irrelevant to the availability of plastics and other synthetic chemicals, it is only relevant to the price (and not very relevant there...)


    2008 Oct 27 04:27 PM | Link | Reply
  •  
    Not only mother-earth enthusiasts should start caring for the earth, everyone should as it's for our common good. I think more and more people are now concerned with the environment and are now more interested in using environment friendly alternatives such as biofuel. Even though it might not be a complete substitute for oil, we at least have the option to lessen our consumption of fossil fuels thus slowing down the degradation of our only planet.
    May 31 03:21 AM | Link | Reply