Skip navigation

Since I have been rambling on about this to friends for the past few days I thought it might be a good idea to actually write this stuff down.  I am probably wrong about this but future developments will be the final arbiter. Ok. What is this “this” that I am going on about ?

I think I may have stumbled on something which might turn out be a positive, if unintended, consequence of the policies of our celebrated most hated person in the world, President Baby Bush.

Right now, as we speak, there are shortages in staple foods being reported around the globe. At the same time the prices of these staple foods has been shooting through the roof causing unrest and protest in dozens of countries around the world. (note: this is *not* the positive part).

There are undoubtedly many factors which play a significant role in what is transpiring. Yet two factors seem to be almost conspiring in terms of the magnitude of these events.  Factor 1) the rising costs of oil. Factor 2) that America has diverted a large proportion of it’s argicultural production to the production of Bio-fuels.

The rise in oil prices cannot account for the shortages of staple agricultural products. And the skyrocketing price hikes for food reported around the world is only partly accountable due to increased transport costs engendered by rising oil prices. To my knowledge there have not been record crop failures which could account for such shortages.

America rose to it’s position of being the “Breadbasket of the world” during the course of 40’s, 50’s and 60’s.  For nearly 70 years America has exported more agricultural products than most of nations of the world put together. ( what would be necessary now is a statistical analysis of said exports and what percentage of agricultural exports is accounted for by other nations and trading entities(eg. Canada, EU).

Personally, I cannot think of one single policy pursued by the Bush regime which I could endorse. Yet sometimes good(TM) things happen inspite of the worst intentions and outright stupidity that one can imagine. The diversion of agricultural production for Bio-fuel production is one of Bush’s policy decisions. I won’t get into that regimes rational for this policy. But this policy decision appears to be causing shortages of staple products around the world. (note: this is *not* the good thing).

Ok. Now on to the good(TM) part. For many years I always wondered why it cost less to ship oil from various places around the world to the US than the actual cost of such transport. How can it be that the fundament of the modern global economy itself is valued a-economically, ie. that there is absolutely no discernible relation between the price of oil and the costs of drilling, processing, and distribution of said oil- and that there is no discernible relationship between the price of oil and the amount of available oil. For those of you outside of America these circumstances may not have been visibile but for Americans this has been clearly visible for the entirety of my life-oil is cheaper than bottled water and only in the past 10 years has this started to change. As a small child I remember gasoline being 25 cents a gallon(3.8 liters).  I remember how people panicked when the price went to $1 per gallon(early 1980’s). Now Americans are paying somewhere in the neighborhood of $4 per gallon. Again there are many factors which go into these prices-taxation, the relative value of the dollar etc.

One little piece of information finally managed to penetrate my thick brain this past year: Oil is only sold and purchased in US dollars. The US currency is the *sole* currency traded for oil.  Aparently this situation was instrumental in the formation of OPEC. This situation is the product of some key agreement between the US and the countries producing oil for export on the world market.

That which defines the boundaries of a system is itself not measurable within the system thus defined. If oil is the principle value of the modern global economic order, due to the fact that all other values are dependant on the value of oil itself, then oil itself, ie. its value, is not a function of this economy. Oil, the price thereof,  is the basis of the equation used in all calculations in the economy.

So what determines the price of oil ? Remeber that the availability of oil is itself dependent upon oil-ie. oil is required to distribute oil. Certainly the amount of oil in production plays some roll in the relative valuation of oil. But the value of oil is not a function of drilling, processing or distribution. The value of oil is also not a function of the amount of oil available-neither in terms of sheer existence, for noone knows what amount of oil is still in existence, or in terms of oil being at our disposal, due to the fact that oil is require to distribute oil. Welcome to negative theology 101. The value of oil is not a function of ….

Right now the speculators who determine the price of oil are panicking. We are probably only at the beginning of this-when all is said and done oil may reach $250 a barrell.  Why are they panicking ? The ways of the world market are inexplicable said the pastor as he became a manager. Of course the demand for oil is rising-China probably now has 150,000,000 automobiles-India’s demand is also rising. But why such spikes in the price of oil? why now ? Bush announced his plans to rape ANWR in order to squeeze out a few more drops of oil. Is the threat from Chavez and Co. to stop dealing oil in dollars what is triggering this panick behavior by the speculators ?

Whatever the reasons may be a couple of things become clear. The entire modern global economy has been based on two major factors: the low costs of transport(ie. the low cost of oil) and the tremendous superabundance of cheap agricultural products. These two factors made the neo-liberal global economic order possible.  It was on this basis that emmisaries from the Harvard School of Economics and the IMF/World Bank went around the world forcing nation after nation into adopting their economies to be export-oriented. Their reasoning was simple: it will cost you less if your own production is specifically targeted at the world market for we (the US) can provide you with food for far less than your farmers are capable of.

Of course these policies have been responsible for so much injustice throughout the world -cataloguing but a mere fraction of these injustices would require a multi-thousand page book. But these policies no longer work. A good(TM) thing. The two factors which previously mention colluded to make these policies economical-and surely enough major changes in one of these factors is having massive repercutions on the factor-the price of oil is skyrocketing at the same time as America is rediverting a massively large percentage of it’s agricultural production to Bio-fuel production.

The price of damned near everything is going up. The dollars is losing value at a historic rate. Noone of my generation can remember when there were such acute shortages of staple agricultural products-and this being reported around the world. Oil is far more expensive than it ever has been and in all likelihood it will never ever become less expensive again. On the whole this would seem to be major bad news for just about everyone in the world. Yet at the same time: when the superabundance of cheap agricultural products is no longer available and when the costs of transport negates the relative inexpensiveness of imported agricultural products-all those countries which have been forced into neo-liberal debt prisons are going to have to refocus their own economies for domestic consumption.  Otherwise there will be mass starvation. These countries do not need to repay their debts in order to do this. Even if America would change it’s course away from Bio-fuel production there is no returning to the unique set of circumstances which allowed for the previous neo-liberal global economic order.

Bush and his friends may have just inadvertently dealt a death blow to one of the most corrupt, oppresive and injust trade systems to have ever graced this earth.  Wow.

your thoughts ?


Karl here.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: