Why olive oil prices are skyrocketing

The price of crude may have hit a five-year low, but there is one oil that is skyrocketing in value.

Olive oil prices have jumped by a third after a weaker-than-expected olive harvest in parts of Italy, France, Portugal and Spain. The crop is down 35 percent in Italy, with newspaper La Repubblica calling it "The black year of Italian olive oil."

The European olive harvest is getting whacked by a perfect storm of anti-olive weather: High temperatures in the spring, a cool summer and a lot of rain. Those also happen to be perfect conditions for the devastating olive fly and olive moth, The Associated Press reports. The olive fly burrows into an olive and lays its eggs inside, and the maggots tunnel out of the fruit, eating as they go.

"This is the worst year in memory," the head of an Italian olive growers' group told the news service. A leading olive oil supplier told The Grocer trade magazine that this is "the most difficult year I have ever seen."

One Italian olive grower is estimating that the price of oil there will rise to about 10 euro per liter, or about $47 per gallon.

The olive crop in the U.S. isn't faring much better. The harvest in some parts of California is down because of the state's prolonged drought and a winter cold snap, according to Olive Oil Times. Growers are also dealing with environmental disputes over how to dispose of the curing and brining solutions involved in olive processing.

Soaring olive oil prices are hurting Europe's already struggling economy. The southern European countries produce more than 70 percent of the world's olive oil, and last year received nearly $2.2 billion from exporting the commodity, according to The AP. The U.S. imported more than $800 million of that total.

Butter prices have also soared this year on extremely high export demand. U.S. dairy farmers have been sending more shipments overseas to such countries as Saudi Arabia, Egypt and Iran instead of stockpiling them. Butter prices surpassed $3 a pound in September, hitting an all-time record, but have fallen since then to $1.92 a pound Monday on the Chicago Mercantile Exchange.