Oil prices recently hit 100 dollars a barrel, and the days of cheap oil appear to be over. Meanwhile, Starbucks is struggling with plummeting stock prices and falling profits. These facts are intimately connected, illustrating the dangers and opportunities ahead. Our food system, which provides us with massive amounts of low cost, unhealthy food, relies heavily on oil. As fuel prices rise, the food that depends on large energy inputs to grow, process, and deliver quickly gets very expensive. Rising food and fuel costs are already hurting Starbucks in interesting ways. More importantly, following the web that links fossil fuel prices to the falling fortunes of Starbucks illustrates how the end of cheap oil gives us an opportunity to transform our economy, our health, and the very sustainability of our farmers and farm lands.
Problem number one: sales are down at Starbucks. Ever-increasing petroleum costs are driving up the prices of food, fuel, and other goods. Americans feel pinched, and some realize that a daily vente latte is actually a luxury, not a necessity. Starbucks is also battling competition from lower-priced coffee houses.
Problem number two: costs are up at Starbucks, and if you look for reasons, they all lead back to oil. Milk prices rose more than 23% in 2007, but this doesn't mean dairy farmers are getting rich. Feed costs for dairy cows have increased 75% in the past few years, partly because corn is being diverted to ethanol production. Diesel fuel prices have tripled. Transporting coffee from all over the world is getting more expensive. My favorite tidbit about the oil up-Starbucks down connection has to do with disposable lids. I hate the fact that if you don't speak up quickly enough, the baristas put all drinks in disposable cups. It really bothers me to see all those people sitting in Starbucks drinking their lattes out of disposable cups with plastic tops, and then throwing them away as they leave. 50 million(?)But the plastic lids are a petroleum product, so they will cost more and more. My hope is that as oil prices keep climbing, Starbucks will find it cheaper to offer ceramic mugs to everyone.
You could say that the end of cheap oil is spelling the end of Starbucks' meteoric rise. Over the last year, stock prices of the world's largest coffee house chain fell 50%.
This, to me, is great news. Not because I hate Starbucks, which I do. But because it shows how everything is connected, especially to oil. Starbucks' plight illustrates how soaring oil prices are beginning to affect our food system in all kinds of fascinating ways. I see this as a possible path to our salvation.
For about 50 years, our economic system combined with federal agricultural policy has worked in exact opposition to a food system that is healthy, safe, sustainable, and kind to farmers, livestock, and the earth we depend on. As a result, most of the calories we consume come from the industrial food chain. On any given day, a quarter of American adults visit a fast food joint. Eating this way undermines everything we know is good in a healthy agricultural system. These virtues include farmers' well being, care of land and water, our health, food safety, security and resilience. And now, as prices go up on all the products (not food exactly) made cheap by cheap oil and bad policies, the tiny bit of our food supply that comes straight from nearby farmers, practicing good husbandry, will become more and more economically "competitive" compared to the industrial one that now provides most of our calories. This is a great thing!