How Fossil Fuels and Fertilizers are Impacting Today’s Food Prices
Although gas prices are coming down in response to lessening demand and a weakened economy, food prices are continuing to rise to historic heights.
Grain goods, which include cereals and baked products primarily cooked with flour, are costing an average of 15% higher than they did a year ago. Dairy items, including milk, are 14.9% higher, while fruits and vegetables are up around 9.3% from where they were at this point last year.
According to U.S. Department of Agriculture forecasting models, food-at-home prices, which include groceries, are predicted to increase as much as 11% by the end of 2022. Meanwhile, food-away-from-home prices, which include restaurants, may go up as much as 7.5%.
This is not strictly a domestic issue. The United Kingdom’s inflation rate jumped to 10.1%, largely due to increased food prices, which rose 2.3% between June and July alone. The United Nations estimates that 345 million people face acute food insecurity, which is a nearly 25% increase from the beginning of the year.
With Fuel Prices Decreasing, Why are Food Prices Rising?
We have previously discussed several factors that led to high food prices, but one issue we have not covered is the role fossil fuels, especially natural gas and coal, play in the manufacture of fertilizer.
Nitrogen-based fertilizers are manufactured by mixing nitrogen from air with hydrogen produced from natural gas at high temperatures. At the right temperatures and pressures, this mixture forms ammonia, which is then chemically reacted to make nitric acid. When mixed, these products form ammonium nitrate.
In other countries, such as China, coal is used as a feedstock for fertilizer production in a similar manner to natural gas.
With global instability cutting off significant portions of the world from their previously regular supply of natural gas, the commodity’s price skyrocketed. This cost is passed on to farmers, who are having a hard time obtaining the fertilizer supplies they need even at significantly inflated prices, which is reflected in consumer pricing.
What Can Be Done?
As the old proverb goes, the best time to plant a tree was 20 years ago, and the second-best time is now. In the case of fertilizer feedstocks, the best time to begin the process of increasing natural gas production was two years ago.
The Biden administration remains hostile to fossil fuel extraction on American lands. The EPA recently announced new plans that would significantly impact production in the Permian Basin.
State lawmakers looking to help their constituents afford food over the long term should examine ALEC model policy that would enable their states to return federal lands to state control.