Comments on: Gas below $2

By: Augustine

Augustine — Wed, 26 Nov 2008 18:35:31 +0000

Joe,

I’m not convinced that greater consumption is an answer either because food prices shot up in the last year or so, whereas I assume that the increase in China and India was gradual over many years. Besides, what would it have to do with the price of milk, which is not exported, though dairies are, quadrupling and not having relented yet.

I wonder if it’s the result of some other non-economic factor, such as speculation or mania. IMHO, an extremely underreported issue.

Thanks.

By: JOE

JOE — Wed, 26 Nov 2008 04:14:16 +0000

No, fuel was only one component of the food increases we�ve seen. It appears to be a combination of many factors.
An article I referenced in May, �The Global Food Crisis� discussed a series of droughts causing shortages along with the diversion of food to biofuel. It also discussed the fact that the average Chinese now consumes 110 lbs of meat each year, up from 44 in 1985. One pound of beef takes 20 pounds of grain to produce, so the impact is huge.
Lastly, there�s the increasing prosperity in both India and China, which reduces the elasticity of demand. A poor nation will go to bed hungry, as they prosper, they’ll absorb the cost and pay the higher prices. (This observation from a June 16th article in Forbes)
Joe

By: Augustine

Augustine — Mon, 24 Nov 2008 20:07:59 +0000

I’m still hooting for food prices to go down though. Food prices went up much more than fuel and lagged the fuel prices increase by over a year, so I’m not sure that fuel is the whole story behind the rise in food prices.

What are your thoughts about the rise in food prices in particular?

TIA

By: Stacey Derbinshire

Stacey Derbinshire — Mon, 24 Nov 2008 16:45:25 +0000

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