Recent oil prices escalations, current production of biofuels from food, and rising food prices have caused an awareness of a potential conflict between biofuel production and food availability. Biofuels could help countries reduce their dependence on imported oil and biofuels could lead to some reductions in CO_2 emissions. For such reasons governments have stimulated research and development and subsidized biofuel production. In this study we use a simulation model to study how markets for oil, biofuel, and food may interact and develop in the long run as world oil production peaks and starts to decline due to resource depletion. We hypothesize that a shortage of oil will make biofuels highly profitable, lead to a take-off for the biofuel industry, and lead to food shortages and starvation. We do not reject this hypothesis. A number of proposed policies turn out to delay rather than cure the problem. A better policy is to develop alternative energy sources that do not require agricultural land. In addition one should consider building support for a ban on biofuel production requiring such land.
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