Friday, 4 July 2008

Biofuels did it!

Guardian has a leak from a confidential World Bank report that tells what people in the industry have known for some time:

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

Figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises.

"It is clear that some biofuels have huge impacts on food prices," said Dr David King, the government's former chief scientific adviser, last night. "All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."

When one puts that fact into perspective by looking at the following projections for biofuel (food grain ethanol) growth from Goldman Sachs:

Then it can only mean, that food will get more expensive. A lot more.

Further, the just released IEA Mid-term Oil Market Report estimates that biofuels will at most account for 2.0 - 3.5 Mb/d of liquids supply. That is less than 4% of our daily consumption. A Drop in the bucket. Not even enough to cover one year's worth of natural decline from mature fields (4.3 Mb/d).

So, burn food we will. Higher inflation shall we get. Poor people will we starve. Destroy the climate we shall.

But it won't matter a damn thing, because biofuels will not be enough to save us from the oil declines coming.