High Oil Prices Threaten To Topple Tipsy Economy

Joanna Schroeder

High oil prices threaten to topple a tipsy global economy that is still fragile and has yet to find stable ground according to the International Energy Agency (IEA) who issued a wakeup call to the world. The IEA recommends that high oil-consuming countries, such as the U.S., boost efforts to cut back on oil use.

In response to these warnings, Bliss Baker, the spokesperson for the Global Renewable Fuels Alliance (GRFA) stated, “These sky-rocketing crude oil prices are already having an impact on other commodity prices and food inflation. The IEA’s warnings should be a wakeup call to all countries to reduce our crippling reliance on crude oil. The European Union’s oil imports alone grew by $70 billion last year.”

Also announced last week by the UN Food and Agricultural Organization (FAO) was that the Food Price Index has surpassed 2008 levels. The cause of these spikes, in part, is the increase in world energy prices, although many today are still blaming the increase in food costs on countries’ biofuel policies.

A 2008 report by the United Kingdom’s Department of Environment, Food and Rural Affairs and cited by the GRFA concluded that crude oil prices were a major factor behind the food price spikes. The report concluded, “the rapid increase in global energy prices increased the cost of agricultural inputs, especially fertilizers, so increasing the cost-base of agricultural producers, particularly in the cereals and oilseeds sector.”

Said Baker, “The GRFA issued its own warning with regards to rising oil prices and its effect on food in September 2010. This latest IEA warning and FAO report should encourage us all to reduce our reliance on oil. These food price spikes will continue unless we make concerted efforts to develop alternatives to crude oil like ethanol and biodiesel.”

Baker concluded, “The GRFA has long advocated that biofuels are the best way to reduce our reliance on conventional oil. Even OPEC said in a recent forecast that ‘energy efficiency policies along with the use of biofuel will put downward pressure on oil consumption worldwide’. As we have seen today from the IEA warnings and the UN FAO report, we are increasingly vulnerable to soaring crude oil prices,” said Baker.

Biodiesel, Ethanol, International, Oil