The impact of high fuel prices

Economists say the rise in staple foods is partly due to the record oil prices [EPA]

Fuel prices double on the first day of the year in Jordan while other countries in the region study the possibility of doing away with subsidy on basic commodities. 

As the prices of wheat and soy beans almost doubled during 2007, economists say the unprecedented rise in staple foods since the second world war, is due to a combination of reasons including the record oil prices, which shifted one third of the US farmers out of cereals to grow biofuel crops.

Is the world climate change that led to a significant reduction in world's grain supply and stockpile. Another factor is the sharp decline of the US dollar, the world's dominant currency.
 

Inside story will discuss the impact of the record world prices for fuels and most staple foods during 2007 on developing countries and ask if this is a recipe for major social crisis, and how should governments handle them.

Watch part one of this episode of Inside Story on YouTube.