Sunday, August 26, 2007

Peak Oil: Wheat prices & media spin

This just can through my news aggregator from Energy Bulletin.

BBC News
Wheat prices have hit record highs on global commodity markets, bringing the threat of rising bread prices.

Bad weather in key grain growing areas such as Canada and parts of Europe has limited supplies as demand has risen, sparking fears of a supply shortfall.

Surging prices are also expected to have widespread fallout for consumers.

While it will mean higher bread prices, it could also trigger an increase in meat and dairy prices as farmers battle to pass on rising feed costs.

Global wheat stockpiles will slip to their lowest levels in 26 years as a result, official US figures predicted earlier this month.
(24 Aug 2007)

It’s spin. In money terms this may be true, and it’s headline grabbing. But is it really true. In terms of hours at medium wage rates, how long would it take to buy a tonne of wheat? How much gold would it take to buy a tonne? Any measure got to be better than fiat paper money!

There are all kinds of rules of thumb. Some measures can be personal, measured in relation to your own experience. I’ve heard of one farmer who uses house prices as a measure. He built a home (average 3 bedroom at the time) in the 60’s and he uses the amount of wheat he would have to grow to build an average 3 bedroom home as his measure. He thinks wheat is about a quarter of the price it was 45 years ago.


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