Tuesday, June 17, 2008

The other Peak

With oil prices at speculative, stratospheric levels, the Peak oil hypothesis is going strong. I'm not going to debate about Peak oil. There are literally hundreds of posts out there for and against Peak oil. And frankly, I'm fairly undecided about the phenomenon of Peak oil. I find arguments for Peak cheap oil to be more credible, seeing as how new discoveries appear to be far more expensive to develop. Instead, I'm currently more interested in something else that Peak oil believers have sometimes talked about, and that's Peak phospate.

Anyone who knows anything about fertilizer will recognize the NPK appellation for the three main constituents of fertilizer: nitrogen, phosphorus and potassium. These three elements constitute the building blocks of life and are absolutely essential in the food we eat. Nitrogen for protein, phosphorus for DNA, and potassium for salt balance, among other things.

Fertilizer is of vast importance, and it is one of the reasons why we have been able to develop a modern civilization and to feed so many people on this planet. While modern industrial scale agriculture has been blamed by the organic food movement for the less healthful benefits of modern-day meat and produce (not to mention the negative environmental impacts), it is difficult to argue against the premise that modern agriculture is what has allowed us to feed as many people as we have today. So for the foreseeable future, synthetic fertilizers will still be a very important commodity. Especially since organic fertilizers aren't exactly abundant

Nitrogen fertilizers like urea and ammonia are manufactured by the Haber process, which is energy intensive (coal and natural gas mostly). This is one way the oil price drives the price of food higher (another major way is through transportation costs). However, nitrogen being the major constituent of air, nitrogen fertilizers are a renewable resource that depend only on energy inputs. In the future, renewable energy sources may be used for nitrogen fixation.

Economic sources of potassium salts and phosphates are however, generally not considered renewable, as they are mined from the ground in the form of salts or rock. Of the two, reserves of phosphates are less abundant. Indeed, it has often been bandied about that phosphate is the limiting factor in increasing soil productivity.

Based on current estimates of reserves, we are not likely to run out of phospate anytime soon. So we might be justified in hitting the snooze button on this possibly alarmist proposition. However, as Peak oil supporters are fond of saying, it's not when you run out of a resource, its when you reach peak production (and when demand inexorably continues to rise) that you start running into problems. 

To this, I would add the following comments:
Phosphate reserves are considered abundant at current rates of production, but rates are certain to rise with increasing demand. Demand will come from rising population pressure as well as increasing affluence. Increased meat consumption will necessitate larger crop yields, which will in turn engender demand for fertilizer.

There are no substitutes for phosphate (well, not unless we evolve from a phosphate backbone DNA). So demand will be fairly inelastic.

Phosphate reserves are concentrated in Morocco, a fairly stable country in a not-so-stable region. So like oil, phosphate supply may be subject to geopolitical risks as well.

Phosphate reserves are abundant, but may not all be economic to exploit at current prices. This means that an analogous situation with Peak cheap oil may occur; phosphate will still be available in the future, but possibly at much higher prices.

Should we worry about Peak phosphate? Not in the near to medium long term. There are other more important things on the global agenda. But still, it's probably wise to know more about something that is so intimately connected to the food supply.

Factoid: the world's largest producer of phosphate is the Mosaic company, controlled by Cargill, one of the largest and most powerful privately held companies in the world.

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