Kedrosky on the Nitrogen Fertilizer Perfect Storm
by Lloyd Alter, Toronto on 03.31.07
Everything I know about economics (which isn't much) I have learned from Paul Kedrosky, who notes that nitrogen fertilizer prices have gone through the roof. Corn needs fertilizer and we have noticed that there is a lot of corn being planted these days. Paul says "Why are nitrogen fertilizers costs up so much? Demand is part of the equation, but there is a supply issue as well. Keep in mind that the price of nitrogen is tied directly to the price of natural gas, with 1 ton of fertilizer requiring about 33,500 cubic feet of natural gas. The upshot is that with rapidly increasing demand, plus increased components prices, we have a pricing perfect storm for nitrogen fertilizers."
Why does nitrogen fertilizer need so much natural gas? Paul recommends this link, discussing the Claude-Haber process. Fritz Haber is a fascinating character; read more about the new biography of him at Amazon. ::Infectious Greed
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This issue has me really enraged. I heard on the radio, today, that fertilizer prices in Canada are continuing to sky-rocket based on increased demand for chemical fertilizers--used to support the increasing corn ethanol market. Are we not trading one evil for another? Perhaps one should create a market for "organic" ethanol, one where the corn is grown with good-old natural fertilizer. Perhaps, the Candian government--or at least Ontario--would help provide it, as they seem to create a lot!