Industries in scrap for water supplies

Energy companies have been accused of unfairly competing against US farmers for water during the country's worst drought since 1936, with oil, gas and biofuel operations particularly singled out.  

With the increasing use of water-intensive drilling techniques in the US such as ‘fracking' – one well can require up to five million gallons – and mandates setting targets for biofuel production, demand for water has significantly increased.    

But while farmers normally pay around $30 (£18.50, €23.30) for an acre foot –around 326,000 gallons – rising to $100 during shortages, oil and gas companies can easily outbid this – in Colorado, energy firms have been paying up to $2,000 for an equal quantity of treated water from city authorities.

Ben Rainbolt, executive director of the Rocky Mountain Farmers Union, is blunt: “We're not going to be able to raise the food we need.”

Tisha Schuller, president of the Colorado Oil & Gas Association, emphasises the importance of the energy industry and its needs: “Think about the big users of water – agriculture, industrial development. All these things require energy.”

The clash has triggered profit-seeking, as cities and even farmers are selling excess water. Aurora, a Denver suburb, is to lease 2.4bn gallons of effluent water to the Anadarko Petroleum Corporation over five years. Aurora claims it has no use for it, but opponents say the deal will deprive local users of a valuable resource.

The US drought has also sparked calls there for an end to the biofuels mandate, but the EU has gone a step further by proposing to limit biofuel production, even at a time when demand has risen sharply.

South America, Russia, India and China, as well as the US and Europe, have experienced water shortages, sparking fears about spiralling food prices – the UN predicts a 15% rise over the next nine months.

One reason is that shrinking – and therefore dearer – animal feed crops will hit the cost of meat.

Agricultural commodities specialist Rabobank predicts that slaughter rates will initially rise in reaction to dearer feed, temporarily increasing meat supplies, but that this will lead to a longer term cut in herd sizes, followed by a greater scarcity of meat and dairy products.