2007 - A symbolic milestone year in economics?

Alias on 2007-09-03T03:53:32

This last few years have seen the spooling up of serious changes in the War on Global Warming (trademarked!!!). For my own part, I switched my house to being powered entirely by windmills in New Zealand, and I've managed to switch a few other bits and pieces over.

More worrying for me however, is the recent huge advances in the technology, economics, and political willpower to get biofuels of various types off the ground.

This year we hit a key, albeit symbolic, milestone that will have far-reaching effects far beyond the current "climate crisis".

Because this year, the United States corn ethanol industry has grown enough to soak up the extra capacity of US corn producers. From this year on, the pricing of one of the world's more significant food price indexes will be directly linked to the price of oil. The cost of fuel is now directly linked to the price of energy.

Now, it's been partly linked for a long time, because it takes lots of energy to process the corn, package it, and get it to the point of sale. But until now, there's been at least SOME notional separation between the two. Extra corn (and other farm products) went to feed lots to make meat, which is also food.

But things are different now.

FROM NOW ON WE COMPETE WITH ROBOTS FOR FOOD

Now, the ACTUAL amount of food cost changes right now is minor, something in the order of 10% or less change in the prices. The price fluctuations from the effects of the weather on crops is more significant. There's also not a universal food -> fuel link yet. But it's the link itself that is the main point here.

But all across science and industry, people are looking for more ways to divert more human food into robot food, and to do it more efficiently.

And since humanity currently consumes more resources than is produced by the entire earth in a year, there is essentially unlimited demand for human to robot fuel conversion, as oil production gradually tapers off. There's always been some secondary uses for food products of various sorts, but now we see a literally unquenchable market. Humanity will always be hungry for more energy, all the way out until we wrap a dyson sphere around the sun.

The most worrying problem is that we are only just getting biofuels off the ground. From here on in, every time the efficiency of biofuel processes go up by 10% so does the profitable of feeding robots instead of humans. And so food prices will rise again.

Sometimes this will take a while. I would bet that feed lot operators in the US are hurting at the moment, as the cost of one of their primary inputs goes up a lot, they'll hold out for a while until the market forces them to push up prices.

It will be a long slow process of course, large scale change always is.

But I hereby declare the competition officially underway.


Biofuels

pudge on 2007-09-06T01:06:33

Biofuels seem economically infeasible to me so far. We'll see if that changes.

I did see one exception recently. At the state fair they took all the cooking grease from the food vendors, tons of it (perhaps literally!), and converted it on-site to biodiesel, which was used to fuel the tractors and other vehicles used to run the fair. Very cool.

Re:Biofuels

Alias on 2007-09-07T07:17:33

Certainly much of it IS likely to be economically infeasible, just as air travel was economically infeasible for most people until mass use planes like the DC-10 came into existance, and more recently the "budget airline" business model (which ruthlessly optimised out almost all the procedural and luxury fat).

There's certainly economically feasible models, such as sugar cane in Brazil or canola/etc oil crops and so on.

We've been competing with robots since 1974

pjf on 2007-09-06T03:08:13

Most modern agricultural techniques are extremely energy intensive. We use fertilizer, pesticides, herbicides, mechanical planters and harvesters, and long distance transport, all which requires energy input. In 1940 the united states produced 2.3 calories of food for every calorie of fossil fuel used. In 1974, the ratio was 1:1, and it's been getting worse ever since.

So we've been directly competing with robots for food ever since 1974. Our food supply depends upon a stable energy supply; this is nothing new. However what you've described is something new, and it's much more scary. Let's look at why we may be turning corn into fuel:

  1. The cost of other energy sources is too expensive, and it's cheaper to grow corn than produce oil.
  2. Artificial factors such as subsidies and tariffs make it profitable to grow corn even when there is insufficient demand.

Corn may well be one of those crops which gives us a net energy surplus after we've gone to the effort of growing it and converting it into ethanol. If so, then using corn for fuel is easing our energy pressures, at least for the time being. That would indeed be lovely, however I'm not convinced.

I think there is a real risk that we're turning corn into fuel not because it gives us a net energy gain, but because artificial economic reasons such as tariffs and subsidies make it profitable to do so. In that case, we're effectively subsidising the destruction of energy for no good reason whatsoever. I find this much more chilling than merely competing with robots for food.

digg this

Re:We've been competing with robots since 1974

Alias on 2007-09-07T07:23:11

I'm not concerned about the US corn situation at all.

If it's not economically competative and is supported entirely by subsidies, then it is either will have to get more efficient (do you really think the US will be able to afford all these subsidies the next time a major recession hits?) or it's just going to get optimised out of existance.

Stupid inefficient niches eventually go away.

Also, if there's more energy being pumped into farming, and the price of energy goes up, it can be reduced. We already see no-till practices and other methodologies coming along that reduce the amount of work needed, while retaining reasaonble yields/efficiency.

For me though, it's not these one-off things that are the problem.

It's that there's a fundamental shift in progress to COMPLETELY link human food to robot food, whereas in the past it has only been a partial link, and to link ALL types of food to robot food.

Once the link exists AT ALL, general human inginuity and economic forces (laws of physics allowing) will allow that link to gradually get more and more efficient over time.

And short of all humans converting to vegetarianism, there's not a huge amount we can do to make the Mark 1 Homo Sapien Wetware Processor much more efficient.

So we're faced with a gradually increasing difficulty to economically compete with the robots for said food...