Download now: The Downfall of Cable, and the Rise of 5G!

Starving for Oil

Written by Luke Burgess
Posted February 13, 2006

Dear Wealth Daily Reader,

You already know oil is the lifeblood of modern industrial society. Today almost every human endeavor from transportation, to manufacturing, to electricity, to plastics is inextricably connected to this finite resource.

It's not as widely known, however, that food is now nourished by oil. Next to transportation and heating, the industrial food supply system is one of the biggest consumers of fossil fuels on the planet.

Oil and natural gas are crucial at every step of modern agriculture -- from making fertilizers to sowing, cultivating and shipping crops.

But with peak oil production looming, the future of food security is grim.

Eating Oil

From farm to plate, the contemporary food system is inherently unsustainable.

Vast amounts of fossil fuels are used as raw materials and energy in the food system.

Oil refined for gasoline and diesel is critical to run the tractors, combines and other farm equipment that plant, spray the herbicides and pesticides, and harvest/transport food and seed.

Gasoline and diesel is also required to deliver the finished food products. Everyday, countless food shipments are delivered to grocery stores, restaurants, hospitals, schools. On top of all this, customers use oil when they drive to grocery stores to purchase these supplies.

Now, it all seems simple enough. But think about it for a moment...

Food processors also rely on oil for the production and delivery of food additives, including vitamins and minerals, emulsifiers, preservatives, coloring agents, as well as boxes, metal cans, printed paper labels, plastic trays, cellophane, glass jars, plastic and metal lids with sealing compounds. Many of these are essentially oil-based.

In addition, fossil fuels are essential in the construction and the repair of equipment and infrastructure needed to facilitate this industry, including farm machinery, processing facilities, storage, ships, trucks and roads.

In the U.S., agriculture is directly responsible for over 10% of all national energy consumption.

The U.S. food system uses over 10 quadrillion BTUs of energy each year. In fact, over 400 gallons of oil equivalent are expended to feed each individual American annually.

To put that in perspective, the amount of energy used by the U.S. agriculture industry is equivalent to the total annual energy consumption of France.

Growing the food accounts for only one fifth of the energy expenditure. The other four fifths is used to move, process, package, sell, and store food after it leaves the farm.

Some 28% of energy used in agriculture goes to fertilizer manufacturing, and 7% goes to irrigation. And 34% is consumed as diesel and gasoline by farm vehicles used to plant, till, and harvest crops. In fact, the average distance food travels between the farm and the dinner table in this country is 1500 miles-and incredible journey indeed.

The rest goes to pesticide production, grain drying, and facility operations.

The Energy In/Energy Out Ratio

Food is energy. And it takes energy to get food. These two facts, taken together, have always established the biological limits to the human population and always will.

The same is true for every other species on the planet. Food must yield more energy to the consumer than is needed in order to acquire the food.

We can call this the energy in/energy out ratio.

Consider a lion who spends more energy chasing zebras than he can get from eating the zebras he catches.

If this energy balance remains negative for too long, the result is death.

For an entire species, the outcome is a die-off event, which could eventually lead to extinction.

Today we are spending more energy planting, irrigating, harvesting, processing, packaging, distributing and transporting food than the energy we can acquire from eating the food.

The world's food system inefficiency can be summed up in a Swedish study on the production of ketchup.

Researchers at the Swedish Institute for Food and Biotechnology analyzed the production of ketchup.

The study considered the production of inputs to agriculture, tomato cultivation and conversion to tomato paste, the processing and packaging of the paste and other ingredients into ketchup as well as the retail and storage of the final product.

All this involved more than 52 transport and process stages.

The aseptic bags used to package the tomato paste were produced in the Netherlands and transported to Italy to be filled, placed in steel barrels, and then moved to Sweden.

The bottles for the ketchup were either produced in the UK or Sweden with materials form Japan, Italy, Belgium, the USA and Denmark.

The polypropylene screw-cap of the bottle and plug, made from low density polyethylene, was produced in Denmark and transported to Sweden.

Additionally, polyethylene shrink-film and corrugated cardboard were used to distribute the final product.

Who knew so much went into making ketchup?

Over all, including energy costs for farm machinery, transportation, and processing, and oil and natural gas used as feedstocks for agricultural chemicals -- the modern food system consumes roughly ten calories of fossil fuel energy for every calorie of food energy produced.

How long can we sustain this?

The Cuban Example

In the late 1980s, farmers in Cuba were highly reliant on cheap fuels and petrochemicals imported from the Soviet Union, using more agrochemicals per acre than their American counterparts.

In 1990, as the Soviet empire collapsed, Cuba lost those imports and faced an agricultural crisis.

The population lost 20 pounds on average and malnutrition was nearly universal, especially among young children.

The Cuban GDP fell by 85% and inhabitants of the island nation experienced a substantial decline in their material standard of living.

Cuban authorities responded by breaking up large state-owned farms, offering land to farming families, and encouraging the formation of small agricultural co-ops.

Cuban farmers began employing oxen as a replacement for the tractors they could no longer afford to fuel.

Could this happen in the US?

For too long we've put a blind faith in technology, believing naively that "they'll think of something".

Maybe "they" will. But for now oil is hard-wired into our culture.

Many people cling to a belief that higher oil prices will spur more oil discoveries. But they ignore what earth scientists have been saying for years: there aren't any more big discoveries to make.

It took 500 million years to produce these hydrocarbon deposits and we are using them at a rate in excess of 1 million times their natural rate of production.

On the time scale of centuries, we certainly cannot expect to continue using oil as freely and ubiquitously as we do today.

Something is going to have to change.

Despite the appearance of an endless cornucopia of food, it is a fragile bounty, dependent upon the integrity of the global oil production, refining and delivery system.


- Luke Burgess
Buffett's Envy: 50% Annual Returns, Guaranteed