OLIVE OIL ECONOMICS.

[Note: This is an essay that was recently published in Expatica Spain].

Tonight for dinner, I’ll be having veal cutlets sautéed in butter and served with an apple, cream and Calvados sauce.

No, it’s not that I’ve suddenly become a French food fanatic. It’s just that...I can no longer afford to cook Spanish food. Olive oil—the building block of nearly every Spanish meal—has become prohibitively expensive for those of us without the letters “CEO” on our business cards.

I’ve watched with horror as the price of olive oil at my local supermarket has skyrocketed during the past year. But I assumed that it was due to price-gouging by the store manager. It is, after all, the only supermarket here in Sanchoville—and nothing tempts a store manager quite like a monopoly.

But then last week, Expatica published an article stating that olive oil—whose average price during the past year has risen from 3.14€ to 4.50€ per liter (i.e.,44%!)—has become a de facto luxury good in Spain.

Expatica further reported that, “[O]rganised criminal gangs...have mounted a series of raids on olive oil plants in Andalusia in recent months, stealing at least 500,000 litres”—although I suspect that the thieves were members of the Italian mafia and the oil was not resold on the black market; but rather, it was funneled directly to their wives’ kitchens. Tony Soprano may be a lot of things, but tolerant of French food surely isn’t one of them.

In any event, olive oil has certainly become a luxury good in my home. And for the first time since I completed grad school in 1995, it has ceased to be the sole cooking oil in my kitchen pantry. I do keep a small bottle locked in a strongbox—you know...just in case an unexpected guest should demand a salad. But otherwise, Chef Sal now cooks with butter (at 2€ for a nice, big block) or sunflower oil (at a refreshingly merciful 0.60€ per liter!).

But here’s the thing that I don’t understand. Shouldn’t the economic laws of supply and demand have prevented this price increase from happening in the first place? Sure, there’s a high demand for olive oil in Spain. But then again...we’re the world’s largest producer, dammit!

By way of analogy, let’s look at Saudi Arabia. It’s the world’s largest producer of petroleum oil. But Saudi drivers surely aren’t paying 1€ for a liter of gasoline like we are!

Or are they? I decided to find out.

So I contacted my Middle East-based work colleague and asked him the following question: “How much does a liter of gasoline cost in Saudi Arabia?”

His answer: “For $1 USD, you can buy 6.25 liters of petrol.”

In other words, 0.13€ per liter.

So by this standard., shouldn’t we residents of Spain (i.e., “The Saudi Arabia of Olive Oil”) be paying 0.59€ per liter of olive oil?

Then I had a frightening thought. Maybe the price of olive oil in Spain *is* comparable to the price of gasoline in Saudi Arabia. If we Spanish residents are paying 4.50€ for a liter of olive oil, then—extrapolating (again) from the Saudi example—shoppers in Ireland must be paying nearly 35€ per liter!

Or are they? I decided to find out.

So I contacted my Dublin-based work colleague, Kathleen, and asked her the following question: “How much does a liter of olive oil cost in Ireland?”

Her answer: “Oh...around 4.50€ per liter.”

[Sigh!]

So what does all this mean? I’ve reached a few conclusions.

First, olive oil tastes better than butter. Butter tastes better than sunflower oil. But it all tastes the same once you’ve added a big spoonful of curry powder. So let’s all save a few Euros and sit-down to a nice Paella Vindaloo.

Second, current price levels show that a liter of olive oil is four and a half times more valuable than a liter of gasoline. Spain is the world’s largest producer of olive oil. Boy-oh-boy...I sure hope that nobody in Washington DC decides that Spain needs a “regime change.”

Third, if my Irish friend Kathleen should ever drop by my house and demand a salad, then she’d better bring her own damn bottle of olive oil.