The other oil shock: Prices for cooking oil driven up by growth of global economy and biofuel industry

Here's a BIG story: "A startling change is unfolding in the world’s food markets. Soaring fuel prices have altered the equation for growing food and transporting it across the globe. Huge demand for biofuels has created tension between using land to produce fuel and using it for food," reports The New York Times. "A growing middle class in the developing world is demanding more protein, from pork and hamburgers to chicken and ice cream. And all this is happening even as global climate change may be starting to make it harder to grow food in some of the places best equipped to do so, like Australia."

"This is the other oil shock," Keith Bradsher writes from Malaysia. "From India to Indiana, shortages and soaring prices for palm oil, soybean oil and many other types of vegetable oils are the latest, most striking example of a developing global problem: costly food. The food price index of the Food and Agriculture Organization of the United Nations, based on export prices for 60 internationally traded foodstuffs, climbed 37 percent last year. That was on top of a 14 percent increase in 2006, and the trend has accelerated this winter. . . . For the foreseeable future, that probably means higher prices at the grocery store and fatter paychecks for farmers of major crops like corn, wheat and soybeans."

Much of the story focuses on the important role of cooking oil in poor countries and the jump in prices for palm oil, partly driven by spreading bans on trans fats, use of soybeans to make biodiesel and American farmers switching from soybeans to corn to take advantage of the U.S. ethanol boom. "American soybean acreage plunged 19 percent last year, producing a drop in soybean oil output and inventories," Bradsher notes.

This is an excellent example of a global story with local connections, one that can be told from a local point of view anyplace corn and soybeans are raised. To read it, click here.