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51 comments on Algeria & Morocco: Natural Gas Cartels, Fertilizer Mercantilism, and Rising Tensions

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tropicalcactus on July 14, 2008 - 10:09am Permalink | Subthread | Comments top

We often focus too much on oil and not enough on natural gas or coal --oil depletion must be seen in context of the larger energy supply equation.

Similarly, in the real world, the entire energy sector itself is now strongly interacting with other scarce resources such as phosphate, water or farmland to create profoundly dangerous negative synergies. By their actions in Algeria and Morroco, it is clear that the United States, France and Russia all are doing their best to position themselves against such an outcome.

In my opinion, there is no greater potential for a "sleeper" or dark horse of a crisis to emerge than the interplay between the energy, food and fertilizer sectors --with phosphate and natural gas acting as eyes of the coming storm.

I have been covering agricultural commodities for some time now and the disturbing, disintegrating connections between fossil fuels, food and fertilizer are starting to come together like some revelation from the opening moments of a sci-fi disaster flick.

Some may not like the comparison, those who believe that markets tell resources to materialize will consider that last sentence extreme. And yet, we've really got to watch fertilizer because it is in this sector that the relationships between fossil fuels, food and politics will begin to explode apart.

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davebygolly on July 14, 2008 - 12:27pm Permalink | Subthread | Parent | Comments top

Similarly, in the real world, the entire energy sector itself is now strongly interacting with other scarce resources such as phosphate, water or farmland to create profoundly dangerous negative synergies.

Exactly right. The uphill side of the oil age was driven by the same but positive synergies! I would love to see some young (or at least energetic) mind trace out the upside synergies in detail, not as an abstract academic exercise, but in order to give us a better insight into the "negative synergies" that are operating now. How closely does the unwinding mirror the winding? Far beyond just interesting.

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memmel on July 15, 2008 - 1:33am Permalink | Subthread | Parent | Comments top

I don't think they invert like your saying. Here is why. To use Old Testament slang :)

Oil production beget NPK beget demand for Phosphorous
Low oil production beget corn ethanol beget NPK beget demand for Phosphrous.
Heavy Sour crude beget demand for NG for coking beget no NG for NPK and distilling beget expensive corn ethanol

The problem is demand created by more oil actually increases and oil suppy decreases it does not decrease so the less oil we have the more demand we have for all the other critical commodities with the center being NPK and NG.

Oh crap :)

But this is why I've said we won't go down because of oil depletion partial substition of biofuels increased EROI etc are going to result in us running out of cheap NPK or NG before we run out of oil.

Once cheap NG and NPK fertilizer are gone the party is over. And I bet the price increases in these once they become critical will blow your mind.

We can substitute for oil esp in transportation we may not "like" changing our lifestyle but we cannot easily substitute for NG and NPK.

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phil harris on July 16, 2008 - 7:50am Permalink | Subthread | Parent | Comments top

My UK farmer friends saw the biofuels impact on fertiliser prices starting if I remember ~18mo ago (they must do forward buying) because, initially, USA setaside was being brought to cultivation and US merchants apparently had bought a lot of world potassium. The mines (e.g. USA, Russia) apparently are doing catch up.
Rock phosphate however is likely the more longer term critical limiting factor.
We need to try to consider separately NPK from one another. 2% of world energy is devoted to fertiliser N production. 5% of NG goes to ammonia production (energy + feedstock). N fertiliser production could in future command a higher priority as needed? Reasonable estimates suggest a doubling of N production needed in the next 50 years. The world must increasingly re-cycle all the soil nutrients.
A lot of useful stuff is at the IFA. They are sanguine about future phosphate just now, see quote and link below.
I would like to see better estimates of the relative losses to the environment from agricultural systems of each mineral resource.
Generally speaking, Asian mainstay cereals production re-cycles more NPK in situ , especially P & K, and needs smaller annual replenishment with synthesised N, compared with N American, European or similar agriculture systems.
World competition from biofuels for agricultural resources must put strain on future food production.
Phil

Approximately 4% of total annual natural gas consumption in the USA and West Europe is used to produce raw materials, especially ammonia. In some countries, however, the use of gas for ammonia production accounts for a large proportion of national gas consumption. In India, for example, this proportion is roughly 40%. http://www.fertilizer.org/ifa/statistics/indicators/ind_reserves.asp

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