Pribek

FT, Financial Times, is a source that I look at daily.

Somewhat related to my earlier rant are two pieces that I urge you to take a look at. Oil Prices-Food Prices is rapidly becoming a high stakes game of global chicken.

First we have, “Global approach required to tackle food prices” by Dominique Strauss-Khan, managing director of the International Monetary Fund.

High food prices are today a serious humanitarian concern. They are also a source of macroeconomic instability affecting budgets, trade balances and, of course, incomes almost everywhere in the world.

Agricultural policies must change. Higher food prices over the past few years in part reflect well-intentioned, yet misguided policies in advanced economies, which attempt to stimulate biofuels made from foodstuffs through subsidies and protectionist measures.

In the other corner we have, “Saudis put oil capacity rise on hold”, by Carola Hoyos.

Saudi Arabia, the world’s biggest oil producer, has put on hold any plans to further increase long-term production capacity from its vast oil fields, its most powerful policymakers have said.

New York benchmark futures reached a record of slightly less than $117 a barrel last week in response to fear that Russia, the world’s second largest producer, was unable to increase production in the next years.

Abdullah Jum’ah, chief executive of Saudi Aramco, the kingdom’s oil company, said in a closed door meeting with oil ministers and executives in Rome on Sunday that market signals were ’imperfect’ and that there were uncertainties created by the move away from oil, the world’s worsening economic outlook and the recent turbulance in the financial markets, according to one person who took notes at the discussions. This has impacted Saudi Arabia’s view on the profitability of investing billions of additional dollars into its industry at this point, Gulf sources said.

King Abdullah, reported by the official news agency this month, said: “I keep no secret from you that when there were some new finds, I told them: ‘No, leave it in the ground, with grace from God, our children need it’.”

The interesting side bet here is that production of biofuels is given as a reason for the increasing food prices and the increasing oil prices.