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Economy and the World in Crisis: Gas, Food, Thought

Jennifer L. Jackson - 5/11/2008

Crisis is defined first as a "turning point" and secondly as a "crucial situation." Currently the world is deep into the latter as it relates to energy and food, though inevitably the present situation will evolve into the former. The international community, and particularly the United States, must be willing to think differently about energy, food, and the environment. The current paradigm, as expressed by consumption and inaction, reflects an underlying belief that there will always be more and that this crisis, and others before it, are temporary. Just as society had to accept that the Earth is not flat and the Sun is the center of the universe, we must now accept that oil is not a renewable resource and that how we live today will determine how our grandchildren live tomorrow. We must think about problems in a new way or we will never generate a new reality; we are, in fact, destroying our current reality.

The gas crisis is primarily the result of demand exceeding supply. The increased consumption of emerging economies in Russia, China, and India are adding pressure to a supply already strained by extreme over-consumption in the United States (which accounts for 25% of all oil and gas used in the world). There are also emerging economies in the Middle East experiencing rapid growth as a result of oil profits, which are in turn withholding greater amounts of produced oil for internal use. The dependence of the Western World on oil allows oil-producing nations to use the price and production of crude oil as a unique form of economic sanction and a highly effective political tool. The U.S. wars in Iraq and Afghanistan, coupled with generally tense relations between the West and Middle East, only serve to exert more stress on the global oil markets. Certainly this is an oversimplified explanation of a complex situation, but one need not be an economist or a geologist to understand that one day, in the not so distant future, the oil will run out.

The most obvious indicator of the gas crisis is the steadily rising price per barrel, currently over $121. These inflated prices are having catastrophic effects internationally, from state to industry to individual. Nations (particularly impoverished nations) are forced to expend their limited financial resources on increasingly expensive oil imports, which directly and negatively impact their ability to provide their citizens with necessary social programs or invest in economic development. Industries dependent on gas for operation, for example, housing construction and commercial airline carriers, are also affected by the rising cost of oil. It is impossible to pass the escalating cost of business on to consumers, as individual and household budgets are stretched to capacity due to the increased cost of food and gas. Another global consequence of the exponential increases in the price of oil is the current food crisis; as the cost to cultivate and transport crops has risen dramatically, the price of staples has become unaffordable to many of the world's poor, turning them into the world's starving. There are also international security concerns associated with the increased profits oil-producing nations are collecting; Iran, for example, has dedicated a sizable portion of their oil revenue to the purchase of advanced weapon systems, while publicly threatening the security of Israel, other nations in the region, and the world.

Like the gas situation, the food crisis is also chiefly the result of the demand/supply ratio; however, with the gas crisis the pressure is on the demand side of the equation (for now), whereas with the food crisis the pressure is on the supply side. It is true that there is an increased demand on the world's food supply from swelling populations and incomes in China and India, and the rising gas prices are forcing the cost of producing and transporting crops up, but at the root of the food crisis are more fundamental environmental and agricultural issues.

Extreme weather conditions, caused by overall climate change, are having a disastrous effect on the global food supply. Six years of drought in Australia has reduced the country's rice production by ninety-eight percent. Floods in Argentina have cut the world's supply of milk and butter. Globally, droughts and flooding are expected to become more severe and frequent over the next century according to the Intergovernmental Panel on Climate Change. Even in areas not affected by flooding or drought, agricultural production is low. Investments in agriculture have decreased, at a time when farmers in impoverished countries need high-yield seeds and fertilizer more than ever. Much of the world's land is not arable, due in large part to a failure to establish adequate water management systems for irrigation and flood prevention. This problem is highlighted by Africa, where only seven percent of the land is arable. One of the more recent strains on the global food supply is the diversion of food crops (corn, soybeans, and sugarcane) to the production of biofuels, which also diverts land and other resources used in farming to the production of ethanol and other biofuels. In the United States, farmers are actually paid subsidies to divert food crops to biofuel production.

The World Bank estimates that over 100 million people were pushed into poverty over the past two years due to rising food prices. Thirty-seven countries are currently facing a food crisis according to the UN Food and Agriculture Organization. Over the past several weeks there have been protests and riots in response to the increasing food costs in Haiti, Bangladesh, Egypt, Yemen, Thailand, and a number of other countries around the world. Over the last four months rice prices have more than tripled. One and a half million individuals (one-third of which are children) will be denied food by World Vision International, as the organization was forced to scale back due to the increased cost of operation. The UN World Food Programme estimates that one child dies every five seconds as a result of hunger or hunger related causes.

Albert Einstein said that, "The significant problems we face cannot be solved on the same level of thinking we were at when we created them." U.S. presidential candidates Senator Hillary Clinton and Senator John McCain have both proposed lifting the federal gas tax this summer. The Chrysler automotive company is now offering an incentive on new vehicle purchases which fixes the cost of gas at $2.99 (USD) per gallon for three years. Today the U.S. House of Representatives is convening to discuss the "windfall" profits the oil companies are collecting as gas prices rise – they have even invited an OPEC representative to attend. The United Nations and World Bank have united to form a task force to tackle the food crisis; President Bush announced that the U.S. will donate an additional $770 million in emergency food aid. Unfortunately, lowering the price of gas will not replenish the world's depleting oil resource, and emergency food aid will only fight hunger today, but will do nothing for tomorrow.

Neither the gas crisis nor the food crisis is the real problem. The problem is not the mortgage crisis, the AIDS crisis, or a crisis of economics. The real crisis is one of thought. As a world, a society, as people – we are in the midst of a thinking crisis. Instead of focusing on how to get cheaper gas, we must think about how to fuel our world and our lives without gas. Instead of thinking about feeding the world today, we must figure out how to sustain a larger global population tomorrow. We must accept that once we change our thinking, we must align our behavior accordingly. We must learn to value progress over convenience, life over lifestyle. We must acknowledge that we are citizens of a global community, and realize that neither nature nor natural resources recognize our superficial political boundaries. We must transform our collective thought pandemic from the second definition of crisis to the first.

"Change your thoughts and you change your world." (Norman Vincent Peale)