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The Oil-Food Price Shock
When future historians attempt to trace the origins of the current turmoil in the Middle [link widoczny dla zalogowanych] East, they will find that one of the earliest of the many explosions of rage occurred in Algeria and was triggered by the rising price of food. On January 5, young protesters in Algiers, Oran and other major cities blocked roads, attacked police stations and burned stores in demonstrations against soaring food prices. Other concerns—high unemployment, pervasive corruption, lack of housing—also aroused their ire, but food costs provided the original impulse. As the epicenter of youthful protest moved elsewhere, first to Tunisia and then to Egypt and other countries, the food price issue was subordinated to more explicitly political demands,[link widoczny dla zalogowanych], but it never disappeared. Indeed, the rising cost of food has been a major theme of antigovernment demonstrations in Jordan, Sudan and Yemen. With the price of most staples still climbing—spurred in part by a parallel surge in oil costs—more such protests are bound to occur.
Rising food prices matter so much in these countries because the vast majority of the people have been excluded from the conspicuous wealth enjoyed by relatives and cronies of the despots who monopolized power all these years, and because food accounts for such a large share of the family budget. When food costs increase sharply—as they have in the past six months, by as much as 50 percent for some staples—families that were just barely able to survive are plunged into crisis and penury. “The government is humiliating us,” said one young protester in Algiers. “They are raising the price of sugar. We [link widoczny dla zalogowanych] have to pay the rent, the electricity, water, sugar and oil. We are all poor.”
What explains the close relationship between oil and food prices? In their efforts to increase harvests to feed an ever-growing world population, farmers have come to rely on oil for more and more essential tasks. This trend began with the mechanization of agriculture after World War II and the Green Revolution of the 1960s and ’70s. It has continued with the introduction of genetically modified organisms and the proliferation of corporate-run, factorylike farms. Oil fuels farm machinery as well as the vehicles that carry crops to market (sometimes over thousands of miles). It is also [link widoczny dla zalogowanych] employed as the chemical precursor, or “feedstock,” for many of the pesticides, herbicides and artificial fertilizers used in high-tech agriculture. Hence, any increase in the price of oil translates into a rise in the costs of producing food.
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