China Subsidizes Food As Inflation Tops 10% + Diesel Shortages to Last Until End of Year

china street market photo

photo: Dan Zen/Creative Commons

Two stories offering a glimpse at the future in China, and likely elsewhere too:
Diesel fuel shortages hit as the government rations electricity to factories and generators attempt to take up the slack; as the same time poor households begin receiving subsidies as food price inflation hits 10.1%.BBC News reports:

The average wholesale price of some vegetables in Chinese cities rose by nearly two-thirds in the first 10 days of this month, raising fears that food hoarding was exacerbating shortages. It is also thought the government may be considering stiffer penalties for those caught hoarding food. The latest move comes after premier Wen Jiabao said the government was "formulating measures to curb the overly fast rises of prices".

One of those measures may be establishing price controls on grain and vegetables.

All of this comes just as the UN FAO warns that food price rises for 2011 may exceed those of 2008, when shortages and price increases caused rioting in some places around the globe.

As for the diesel shortages, which are expected to ease by the end of the year, the Financial Times (h/t The New York Times) says:

The Chinese government is rationing electricity supply as it rushes to meet ambitious energy and environmental targets by the year's end, hence boosting demand for diesel, power generators and even candles as the country scrambles for extra power. "The primary reason for the diesel shortage is that they cut power supply to a lot of industries," KF Yan, research director at consultancy Cera in Beijing, says.

Remember that just last week, the IEA, which until last year poo-pooed the very notion of peak oil, produced a chart in its annual World Energy Outlook that indicated global conventional oil production had in fact peaked in 2006.

Why a glimpse of the future here? While true that the current diesel shortage does not appear to be an issue of diesel production--rather government policy on electricity trying to meet targets on reducing energy intensity per unit of GDP (so sort of cooking the books)--there's no getting around the fact that situations like this are just over the horizon. On food, part of the reason for the global surge in food prices was extreme weather conditions (price speculation and currency fluctuations also contributed), something we're in for more of as the climate warms.

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More on Food Security:
How Will Food Security Be Affected by Climate Change, Energy Constraints & Water Availability?
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More on Peak Oil:
IEA Chart Says Conventional Oil Production Peaked in 2006
NZ Government Report Warns Peak Oil is Imminent
Peak Oil Alarm Raised by Secret Government Talks
Peak Oil and Agriculture: A Farm for the Future Revisited
The German Military is Freaked Out by Peak Oil

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