Who said it’s all bad news? Globalization was always a totally false construct, built on a foundation of dirt cheap oil prices (around $10 a barrel until only 10 years or so ago), caused by a very temporary global oil glut.

So to see a story about globalization already collapsing at oil prices around 120 a barrel current really makes my day a bit more cheerful. Read on to see how rising oil prices are already impacting the US locally as well.

To summarize some other postings here, ship bunker oil, fuel oil, is from what I can gather basically Number 6 distillate, the heaviest, crappiest stuff, left over after they refine out gasoline, diesel, heating oil, and jet fuel. Read this nice overview in wikipedia if you want to learn the specifics. Check out this sample of current Los Angeles bunker fuel prices.

Noting there that all categories of bunker fuel prices are rising right along with crude oil futures, the following article now should be fairly easy to understand:

The rising price of oil is making international trade of heavy cargo prohibitively expensive, and acting as an incentive for importers to find products such as steel closer to home, new research by CIBC World Markets shows.
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If oil prices continue to rise, the soaring cost of global transport will act like a major tariff barrier and lead to a substantial slow down in international trade, they argue.

“Globalization is reversible,” they state.
High oil prices will hurt trade, report says, Globe and Mail, May 27, 2008

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Last week saw Barcelona receive it’s first shipments of water from France to alleviate it’s massive water shortage.

I’m going to follow this story for a while to see when the first major news source points to overpopulation coupled with the drought. Currently the best they seem able to do is tell us that Barcelona has about 5 million plus people, but it seems to be too much of reach for anyone to say that the arid land simply cannot support that population.

Barcelona is a preview of what’s going to happen in the American Southwest, with Los Angeles, San Diego, Las Vegas, and many other large metropolitan areas built in the desert soon to face the same issues as their water supplies become increasingly impacted by global warming initiated snowpack loss, overpopulation, and of course, a lifestyle that is simply absurd to even consider realistically in a desert in the first place.

Barcelona is a dry city. It is dry in a way that two days of showers can do nothing to alleviate. The Catalan capital’s weather can change from one day to the next, but its climate, like that of the whole Mediterranean region, is inexorably warming up and drying out. And in the process this most modern of cities is living through a crisis that offers a disturbing glimpse of metropolitan futures everywhere.
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The political battles now breaking out here could be a foretaste of the water wars that scientists and policymakers have warned us will be commonplace in the coming decades. The emergency water-saving measures Barcelona adopted after winter rains failed for a second year running have not been enough. The city has had to set up a “water bridge” and is shipping in water for the first time in the history of this great maritime city.

A tanker from Marseilles with 36 million litres of drinking water unloaded its first cargo this week, one of a mini-fleet contracted to bring water from the Rhone every few days for at least the next three months. So humbled was Barcelona when prolonged drought forced it to ship in domestic water from Tarragona, 50 miles south along the Catalan coast, 12 days ago, that city hall almost delayed shipment and considered an upbeat publicity campaign to lift morale and international prestige.
Spain’s drought: a glimpse of our future?, independent.co.uk, 24 May 2008

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The following story shows how the global diesel shortage directly affects an entire region in Africa’s domestic wheat production.

Wheat farmers in the Southern Rift Valley on Tuesday said they were unable to prepare their land for planting due to a serious shortage of diesel.

“It will not be possible for some farmers to plant wheat next month because some parts will be too dry,” said Mr Samuel Gitonga, the chairman of the Nakuru chapter of Kenya National Federation of Agricultural Producers.

Mr Gitonga said that some farmers had been harrowing their farms in readiness for planting wheat but had now suspended it due to lack of diesel. Farmers in the Rift Valley Province produce about three million bags of wheat annually but Mr Gitonga said that the target may not be achieved.
Fuel shortage threatens South Rift wheat output, 5/14/2008

As you can see, unlike the dreams of economists, the markets do not in fact adjust everything nice and neatly, it’s a fairly brutal, unforgiving game, and the sooner countries extract themselves from the industrialized agriculture system, the better off they all will be.

The recent developments in global fertilizer price hikes, diesel fuel rising, global grain prices skyrocketing, point towards one fact:

At Some Point Sustainability Must be Addressed

That, of course, will also expose the true carrying capacities of each region, since industrial agriculture is essentially an extractive industry, not a sustainable one. Sustainable means sustainable, in case you’re trying to confuse yourself, it means you can sustain the practice over time. If unsustainable food production, aka: industrial farming, is used to maintain a population at a certain level, that population is not sustainable.

It’s not, however, nearly as simple as it seems. As a recent The Nation piece reminds us, most global food production has been industrialized, and is in one way or the other, in the hands of global food corporations.

The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn-importing economy by “free market” policies promoted by the International Monetary Fund (IMF), the World Bank and Washington. The process began with the early 1980s debt crisis. One of the two largest developing-country debtors, Mexico was forced to beg for money from the Bank and IMF to service its debt to international commercial banks. The quid pro quo for a multibillion-dollar bailout was what a member of the World Bank executive board described as “unprecedented thoroughgoing interventionism” designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency.

Interest payments rose from 19 percent of total government expenditures in 1982 to 57 percent in 1988, while capital expenditures dropped from an already low 19.3 percent to 4.4 percent. The contraction of government spending translated into the dismantling of state credit, government-subsidized agricultural inputs, price supports, state marketing boards and extension services. Unilateral liberalization of agricultural trade pushed by the IMF and World Bank also contributed to the destabilization of peasant producers.
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With the shutting down of the state marketing agency for corn, distribution of US corn imports and Mexican grain has come to be monopolized by a few transnational traders, like US-owned Cargill and partly US-owned Maseca, operating on both sides of the border. This has given them tremendous power to speculate on trade trends, so that movements in biofuel demand can be manipulated and magnified many times over. At the same time, monopoly control of domestic trade has ensured that a rise in international corn prices does not translate into significantly higher prices paid to small producers.
Manufacturing a Food Crisis, May 15, 2008

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I came across an interesting article re rice production. As you may have heard, the main components of fertilizer are skyrocketing in price. Economists, and people who believe that this way of thinking will help our future, of course make the predictable statement: high rice prices benefit the (largely corporate, but let’s leave that aside) rice growers.

The formula is simple: skyrocketing fertilizer prices are forcing down fertilizer use, which will next year create a major rice shortage.

Few people are aware that beneath the worries over rice which pervade media these days is a looming disaster which could make the rice crisis seem puny in comparison.

To understand the magnitude of this global menace, one would first have to appreciate how world food production quintupled many times over from the early 19th century to the present, making possible the global population explosion.

Of course, advances in global agricultural production technology played their part in boosting food production worldwide, but even their combined impact cannot compensate for something basic to agriculture which has been mainly responsible for increases in farm production since the earliest times: fertilizer.
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One thing which has not been given due attention in the present rice crisis is the effect of fertilizer in rice production. It´s fertilizer which enables countries like Thailand and Vietnam to have astounding rice yields compared to the Philippines. Thus, while we have a wider area planted to rice compared to these two countries, they produce more rice and we often end up importing from them. Without having to go into the details of the variance in yields between irrigated and raid-fed rice paddies, it´s easy to see evaluate the impact rising fertilizer prices have had on the farm gate and retail prices of rice.
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So why does this all matter to the ordinary consumer already burdened by rising prices of food, rice and petroleum products? With the dropping utilization of fertilizer as a result of its rising prices, domestic rice production is expected to fall by over 50% of the rice produced last year and the crisis that is being perceived today will further escalate to real crisis level as early as 2009.
Fertilizer and the looming global food crisis, May 23, 2008

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