Libyan crisis inflates fuel and food prices, says UN

Thursday, March 3rd, 2011
By Steve Tarlow

The price of dairy products have skyrocketed as oil prices have made production more expensive. As a result of the crisis in Libya, the already high food prices worldwide will likely be pushed even higher, reports CNN Money. A report by the United Nations Food and Agriculture Organization indicates that the food price index, which measures the price of a basket of food commodities, was up 2.2 percent in February. Currently, the index is at its highest point since it was created in 1990.

Prices up for most food commodities
While sugar prices were slightly lower in February, prices for cereal, dairy products, meat and nearly every other food commodity rose significantly. According to the U.N. Food and Agriculture Organization, U.S. consumers should expect the price of cereal to remain high throughout 2011, as inventories of wheat and coarse grains are low, and demand has remained high. Compared with February 2010, the cost of exporting grains was up 70 percent this February.

Oil prices pushed up by unrest in Libya
The price of a barrel of oil has exceeded $100 for the first time since fall 2008 – a by-product of violence in Libya that shut down oil production. As a result, U.S. drivers have paid 25 cents more per gallon of gasoline on average over the past 10 days, indicates the U.S. Energy Information Administration. This does not bode well for global food prices, said FAO director David Hallam in a statement.

“Unexpected oil price spikes could further exacerbate an already precarious situation in food markets,” writes Hallam. “This adds even more uncertainty concerning the price outlook, just as plantings for crops in some of the major growing regions are about to start.”

Jeet Dutta, an economist at Moody’s Analytics, sees no uncertainty when it comes to the link between high oil prices and high food prices. The costs of food production and transportation cannot be discounted.

“Energy is a big part of the cost bucket in food production,” Dutta told CNN. “Retail prices lag behind commodities, so consumers haven’t felt the full extent of recent increases.”

Food exporters rebuild stockpiles, tighten supply
Even as global harvests expand, exporters are tightening the reins on such commodity supplies as corn, wheat and soybeans. This chokes global supply, which in turn raises prices. Global financial services company UBS AG projects that corn will reach $8.30 per bushel, a 15 percent jump over Wednesday’s closing price, while wheat will rise to $10 per bushel (a 23 percent increase) and soybeans to $15 per bushel (7.6 percent higher).

High food commodities have pushed 44 million people into poverty since June 2010, said World Bank President Robert Zoellick. According to World Bank data, those 44 million join the more than 900 million people globally who go hungry on a daily basis.

Phl 13th most likely to suffer food crisis
GOTCHA By Jarius Bondoc (The Philippine Star) Updated March 04, 2011 12:00 AM

The Philippines ranks 13th most vulnerable country to surging food prices. This was reported as far back as Sept. 2010 by Asia’s largest investment bank, Nomura. The government appears helpless because of economic strains and policy gaps. It has not stockpiled grains, increased farm yields, or curbed the worst contributors to costly food: runaway fuel and population rates.

The Nomura Food Vulnerability Index comprises 80 poor and rich countries. From their 2008 GDP per capita, share of food in household expense, and ratio of net food export to GDP, Nomura identifies those suffering most from costly food.

Monday, March 21st, 2011 | Business and Finance
Today Oil Prices is $103
Libyan War affects crude oil prices reaching the highest level, that is $ 140 per barrel as it was in 2008.

On Monday, March 21, 2011, oil prices exceeded $ 103 per barrel. The price increasing shot after Libyan leader Moammar Gaddafi vowed a “long war” when the allied military attacks on countries that joined in the OPEC.

Coalition of the United States, France, Britain and other countries attack with tanks and air strikes bombing.

Gaddafi Sabotage Oil Prices
Gaddafi said he would not resign and promised to continue the attack on the fort east of Benghazi. The fighting that occurred over the last month is feared to stop crude oil production by 1.6 million barrels per day and mad Oil prices higher.

Investors are now worried about intervention from the international community to expand the conflict and hamper Libya’s oil production from the previous estimation.

“The regime in Tripoli showed no signs of surrender. In a prolonged loss of Libyan oil to push oil prices up to the highest level to above U.S. $ 140 that occurred in 2008,” Capital Economics wrote the report.

Gaddafi also warned that the west will not going to get Libyan oil, and declared his forces could sabotage crude oil. “Scorched earth response from Gaddafi could cause disruption of the voyages in the Mediterranean,” said the consultant of The Schork Report.

Oil Prices in Afternoon Trading
 

In the afternoon, the crude oil prices for April delivery rose U.S. $ 2.12 to U.S. $ 103.19 per barrel on the New York Mercantile Exchange trading after being down 35 cents on Friday that fester in the U.S. $ 101.7 per barrel.

With the rising stock market last Monday, as the optimistic attitude of Japan to improve the condition of radiation that occurred at Fukushima nuclear power plant, analysts said the demand for energy in this third largest economic country will decline and stay on top limit on the oil prices.

“Japan’s Nuclear Disaster is likely to impact a very long time, meaning that Japan’s economic recovery may be slow and annoying,” said Edward Meir at MF Global in New York. He added that this situation will continue to drag energy prices specialy oil prices.