Kedrosky on the Nitrogen Fertilizer Perfect Storm
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