Petroleum is often referred to as liquid gold. Now another oil may claim the same title. Olive oil. You’re probably aware of its health benefits and, in comparison to other cooking oils, you might like its distinctive taste better, but can you afford it? Thanks to an extended drought in the Mediterranean, prices of olives are at their highest in more than two decades. Indeed, the per ton price of olives has jumped as much as 130 percent just since last year! What’s going on? Blame it on climate change. Prolonged weather patterns have made it more difficult to grow olives, pushing the price of the popular oil to new highs.
In Spain, the source of about half the world’s olive oil, production is down by almost half from last year. Moreover, other olive oil producing countries are limiting exports to protect their own supplies. Suggesting that for consumers, the situation is likely to get worse before it gets better. In the short term, buyers are likely to face higher prices and possibly shortages. Indeed, some buyers may be forced to switch to more affordable, but potentially less appealing oils. In the longer run, better weather conditions could improve olive production, decreasing the current gap between supply and demand. However, if adverse weather patterns persist, olive oil could seem like liquid gold, a product that is just too expensive for many buyers.
Discussion Questions:
1. How are higher prices of commodity goods like olive oil reflected in a nation’s inflation figures? How would the availability of substitute products change the situation?
2. Changing weather patterns have affected growing conditions across the globe. Discuss what climate change means for consumers as they make choices about the food they purchase. Think about your own consumption patterns. Have you changed your buying decisions because of the effects of climate change? How could this play out on a macro scale?
Sources| Washington Post: https://www.washingtonpost.com/business/2023/10/06/olive-oil-extreme-weather/; Euro News: https://www.euronews.com/2023/10/03/spain-hit-hard-by-rising-price-of-olive-oil-as-climate-change-takes-its-toll-on-production; Yahoo: https://www.yahoo.com/news/price-olive-oil-surges-more-135723324.html; Unsplash: Photo by Benji da Vinci on Unsplash