- Ag costs could increase from Middle East unrest
- Higher petroleum prices possible
- Natural gas may help Texas ag
Fallout from the crisis in Libya and the Middle East could put pressure on U.S. agricultural production due to escalating fuel costs, according to a Texas AgriLife Extension Service economist.
“Libya has the largest crude oil reserves in Africa, and it’s a flash point,” said Dr. Parr Rosson, AgriLife Extension economist and director of the Center for North American Studies at Texas A&M University. “The concerning thing is what it’s going to do at a time when we’ve gone through a couple of years where (crude) prices have been relatively stable. This could put some real economic pressure on costs in agriculture.”
If sustained, higher petroleum prices would result in higher agricultural commodity prices as well, Rosson said. That would be passed on to the consumer resulting in higher food prices.
“The whole overarching issue of instability in that region is interesting and amazing at the same time,” Rosson said. “This all started with a small country (Tunisia) and because of instant communications, that being social media, it’s now spread throughout a large portion of the Middle East and even evidence of some unrest in China.
“That’s very important as well. All of this comes on the heels of one of the worst recessions we’ve experienced in decades. We are extremely vulnerable as a manufacturing industry, and the agricultural industry in particular, because of energy costs.”
Rosson said this strengthens the discussions of utilizing natural gas as an alternative energy source.
“Our saving grace in Texas is natural gas prices,” he said. “Converting to natural gas over the longer term is a real plus for Texas because of our reserves and the ability to produce natural gas. There’s a lot of incentive there to effectively produce and utilize that very important resource.”
Farmers already regularly use natural gas to power irrigation systems, Rosson noted.