walkitout (walkitout) wrote,
walkitout
walkitout

food and fuel

I read this:

http://www.latimes.com/business/la-fi-oil28-2008jun28,0,5485259.story

last night and thought about commenting on it, but decided not to.

Today, I read this:

http://www.nytimes.com/2008/06/30/business/worldbusiness/30trade.html?hp

And two things happened. First, I concluded that whatever happy, respectful, good feelings I automatically had about Keith Bradsher had been thoroughly exhausted by this second agricultural article with his name (along with others) on the byline (the previous included the ode-to-chemical-fertilizers that caused me to shriek about how the Vietnam War might have had an impact on productivity, particularly the use of Agent Orange, wait, Agent Blue. Or whatever.). Second, I realized that you _really_ cannot talk about food and fuel separately, altho people persist in doing so.

The LA Times article is about what a world with $200/barrel of oil might be like. It's long. Because they are imagining this hypothetical future world based on current trends, it covers a lot of ground we're all pretty familiar with by now: people staying home, combining trips, moving closer to work, reducing the number of days worked a week, telecommuting, generalized inflation through consumer products that involve petrochemicals (look, just everything, okay?), reduction of disposable income leading to reduction in unrelated consumer spending (like eating out), new car sales tanking and remaining sales be disproportionately smaller cars, increased use of public transit, carpooling, and here's where it finally gets interesting.

The LA Times article actually ran some numbers on shipping, in particular, transoceanic shipping (everything we get is made in China, right?). The current price of fuel amounts to, according to their expert, a 9% tariff. This is a mysterious number. Don't you have to figure the tariff per pound (that is, high value, lightweight goods would pay proportionately less and low value, heavy goods proportionately more). At $200/barrel, it'd be more like 15%.

A little googling turns up this article from back in _May_ (those Canadians are so much more clever than us):

http://www.thestar.com/Business/article/431588

In which the expert mentioned in the LA Times explains himself. There isn't a zero year; he's treating the cost of shipping across the ocean as a plus cost. So in 2000, something that arrived in a port from China has the cost of shipping it from China, whereas something made in or near that port does not, with an added cost of 3%. Numbers from LA Times match. Still no explanation of how you deal with distributing it per item as opposed to per pound. Whatever. Rubin then mentions that at $200/barrel, the equivalent tariff is like tariffs were back in the 1960s. (When shipping from China cost no oil at all? That can't be right. Did he discount for the relative cost of shipping then? Hello? I mean, Rubin is probably hot shit when it comes to numbers, but the journalists never do seem to convey everything, do they?)

The article as a whole, and Rubin's point specifically, is that globalization relies upon cheap energy/shipping and less cheap/expensive energy/shipping will start to reverse that trend. In both articles, it is noted that we're seeing this reversal on steel already. Because these are Canadians, they're mostly focused on how NAFTA (they don't mention it, but it seems obvious) members might benefit from China's loss of business since Canada and Mexico are closer to the US. Of course, there is the whole issue that container shipping on, like, a boat, is hella cheaper than container shipping by, say, rail or *shudder* truck.

The LA Times article wraps it up by talking about how US oil workers are all busy right now, and the net effect of carpooling and telecommuting would be less congested highways (because that's pretty much how people think in California -- altho, to be fair, elsewhere as well). Shiny, happy silver lining.

What the LA Times article does not discuss is the issue of shipping food. Because part of globalization was about you just grow one thing, and then you trade that for everything else you eat. And you grow it in huge tracts of land with lots of petrochemicals. And you ship it. Meanwhile, over at the New York Times, Bradsher et all are bemoaning the blocking of exports of rice by scared countries who don't want Their People to starve. The whole point of globalization after all was to make sure everyone behaved "efficiently" by growing one thing and trading it. Stop the trading and people fall over dead, run out of water, etc. No mention of the cost of fuel. Also not much mention of about how brutally evil global markets are to the global poor in times of shortage: the rich will always eat (even meat), while the poor will have even the food they grow snatched from their hands in a market where Cash Reigns.

So.

Trade -- global or otherwise -- has always had its problems. Unless the speculators-are-creating-this-crisis folks are right, trade has acquired a huge and growing cost that was small and ignorable not so very long ago. Bitching and wailing about export restrictions and how the agenda for Doha is so hard to adjust and blah blah blah is way pointless.

And talking about food and fuel separately is To Miss the Point.
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