What Lies behind Egypt’s Problems? How do They Affect Others?

April 20, 2011 • Farming Practices, Daily Email Recap

Thanks to Mark O’Connor for this article.  One of the graphs below makes very clear the link between the price of oil and the price of food.  See http://ourfiniteworld.com/2011/01/29/whats-behind-egypts-problems/

What Lies behind Egypt’s Problems? How do They Affect Others?

Posted on January 29, 2011 by gailtheactuary

We have all been reading about Egypt in the newspapers, and wonder what is behind their problems. Let me offer a few insights.

At least part of Egypt’s problem is the fact that in the past the government has threatened to reduce food subsidies. Now it is planning to hold food subsidies level and raise energy subsidies, but it is not clear that the dollar amount of subsidy will be enough. The government is taking steps to make food and energy affordable for most, but there is worry that the steps being taken will not be enough.

Egypt’s Declining Financial Situation

There is a good reason why one might expect Egypt to start running into problems with energy and food subsidies. Its own financial situation is declining at the same time that the cost of food imports is soaring. If we look at a graph of Egyptian oil imports, exports, and consumption (using a graph from Energy Export Databrowser, which graphs BP Statistical Data), we find that Egypt’s oil use has been rising rapidly, at the same time the amount extracted each year is declining.

To read the full essay, please click here: http://ourfiniteworld.com/2011/01/29/whats-behind-egypts-problems/

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