First Article: Biofuels won't solve world energy problem: Shell April 20, 2008
Second Article: Food price rises are 'mass murder': UN envoy April 20, 2008

I've got two articles today, courtesy of Straits Times.
Well, the first is very relevant to what we're doing in both Economics and General Paper. We've been reading articles bout Biofuels, oil, and food shortages.

According to the article, the chief executive of Royal Dutch Shell has attributed the shortage of food crops by claiming that 'I don't think we should blame oil, we should blame biofuels.'

From Wikipedia:
The use of renewable biofuels in lieu of fossil fuels is said to reduce greenhouse gas emissions and increase energy security[3] (but see Carbon emissions).
One of the greatest technical challenges is to develop ways to convert biomass energy specifically to liquid fuels for transportation. To achieve this, the two most common strategies are:
1. To grow sugar crops (sugar cane, and sugar beet), or starch (corn/maize), and then use yeast fermentation to produce ethanol (ethyl alcohol).
2. To grow plants that (naturally) produce oils, such as algae, or jatropha. When these oils are heated, their viscosity is reduced, and they can be burned directly in a diesel engine, or the oils can be chemically processed to produce fuels such as biodiesel.

As biofuels now have been negotiated and agreed to replace transport fuels so as to reduce environmental issues such as changing the climate, it is taking off percentages derived from food crops, resulting a shortage in food. As "First-generation biofuels usually come from food crops such as wheat, maize, sugar or vegetable oils", there will be a decrease in supply for food. Besides jeopardising the supply for food, it also battles "competition for sweet water in the world". Apparently, there was no realisation to the repercussions of growth of biofuels through crops quoting from the 1st article that "An official from the International Energy Agency also said the impact of biofuels should have been forseen" (Wow, how efficient)

Due to this phenomeneon, it has lead to food prices rising, which is an unintended consequence, which means supply has decreased as crops are now allocated to the growth of biofuels, resulting an increase in quantity demanded of food. This, to me, also brings in the factor of static efficiency, mainly allocative efficiency. In a situation of allocative efficiency, no one could be made better off without making someone else worse off. This situation, can be illustrated through a Production Possibility Frontier aka PPC graph - all points on the PPC curve is said to be allocatively efficient because we cannot produce one product without making affecting the production of another good. I've decided to add a curve to help visualise.





So anyway, the 2nd article is just to show how people are saying that due to the production of biofuels, it has created a shortage in food, with it's rising food prices, where the poor are suffering in lieu of this "silent mass murder". Yes, we all know of the increasing food prices. I will probably post up bout soaring price of rice soon.

Melissa Tan