With the price of oil-compatible fuels way past $US100 and not coming back down, probably ever, an increasing number of cross-form economic links were ultimately inevitable.
While temporary price shocks can do temporary harm, they often don't create fundamental changes in markets.
A permanent increase in prices, especially for something as critical as energy, naturally has far more dangerous effects, because it can result in new technology that permanently link prices in markets that people are not used to fluctuating in those ways.
The individual steps, of course, are just the accumulation of short-sighted self-interest, because most people, policy makers and companies struggle to see past current market prices.
I truly wonder if people who go into ventures like bio-diesel or ethanol (which leverage the price gradient between low food prices and high oil prices) assume that their operation is too small to make a substantial change to the world prices.
Do they consider the fact that when 100 other people have the same idea, one or two business cycles down the road all of that price advantage will be gone, except for a margin that represents the costs + market-average profits for the most efficient operator in that market.
And of course, once technology has headed far enough in the direction of linking two markets together (the current cycle being a link between food and oil) nothing in the world is going to stop it.
Even prohibitions on that economic activity will create a false market for other activities that work around the prohibitions.
And so we reach the situation where now food and oil are now irrecoverably linked together.
Having realised the problem exists, at least at a "food gets more expensive, oops" level, that industry is moving on to converting non-edible feed stock instead.
But what sorts of feedstock?
Again, people seem to be looking at just the next step, not what the end result it. And it's not necessarily going to help the problem of food supply either.
The zeitgeist currently seems to think that we get commercially-efficient technology for converting cellulose to ethanol, and then start harvesting "Switch Grass" from currently non-viable farming land, which will help fix the food price problem.
This is naive at best.
If we truly do get cellulosic ethanol up and running, that will just be the beginning.
Switch grass may be drought-tolerant, but it still grows better in fertile soil. If a corn farmer currently diverting production away from food into the (subsidised false-economy) ethanol market can change to switch grass and feed that into ethanol instead, then of course they are going to do so.
Every single time we come up with technology to feed the robots that can make more profitable use of farmland than any current food crop (whether or not it's also profitable elsewhere) then farmers will shift their efforts to that crop instead, until food prices go up AGAIN to catch up.
It's basic economic optimisation of one of the few limited resources we have, solar-exposed surface area.
And of course, switch grass is just the beginning, because it's obvious and in front of the media. In the energy stakes, it's an amateur.
If you want to see a truly competitive grass, then you want to take a look at Gamba Grass.
Evolved to suck up the least traces of nutrients anywhere it can get it, and survive continuous grazing by Wilderbeast and other African grazers, Gamba Grass grows to a height of 4 metres in a year. It contains such high energy density that when it burns, fire fighters can't get close enough to it to fight the fire, so hot that it kills off the "fire-loving" Australian natives and converts forest into grassland.
It was stupidly imported to Australia by Northern Territory graziers because it supports a whopping 40 times more cattle than native grasses anywhere it can get enough moisture to grow. Except that once it matures into the 4 metre tall super-fire height, nothing eats it.
If I was looking for cellulose feedstock, this stuff or something like it would have to look pretty damned attractive.
But the rolling effects will spread in other ways.
Feed lot producers are already putting more pressure on grass supplies, devastating the recreational horse industry. Expect more to follow, and owning a pony to be a nearly unattainable luxury even in rich countries (even more so than now).
So far, cattle/sheep/etc ranchers are not badly impacted by the current price cycle, because grazing land is often much less fertile than crop land.
But if all of a sudden a rancher can plant something from the "Monsanto Ethanol Grass" catalogue, harvest the stuff like sugar cane into an ethanol plant, and make a bunch more than for the cattle or sheep currently on that land, expect the prices of meat to potentially skyrocket, because unlike feed lot producers so far the ranchers haven't had to deal with inflated prices for inputs very much, so the price increase of meat has been somewhat muted in comparison to basic stables.
If we move to cellulose ethanol, that equation and a bunch of other equations, move again.
The only technologies that can truly save us, at least for a while, will be those that don't see any improved performance on farm land compared to barren desert (such as some notional 50% efficient solar panels) or that can co-exist on top of farm land (such as wind power).
Of course, even wind power isn't a particularly brilliant power source.
It may be low-emmision, and given a smart enough grid the variability isn't a problem, but like hydro it can only exist profitably on a relatively small subset of the planet surface.
Of course, once the mass-market pure-electric cars start arriving in 2010-2012 and starts chewing up immense amounts of grid power, linking electricity markets to oil markets more directly, the resulting blackouts and price spikes in the electricity market should make a lot more surface area viable for wind...