I remember when I was in high school, the “green” movement was in it’s infancy. They clung to every “crisis” they could think up. There was a new ice age coming, the world was going to starve to death by the year 1990, we were all going to get black lung disease…blah, blah, blah. Well, it seems that we didn’t starve to death in 1990, so the new greens have decided that they’ll create a food crisis with this bio-fuel idea, and their new idea seems to be working well (The Washington Times);
President Bush yesterday asked Congress to authorize $770 million to ease the global food crisis, most of which will be focused on Africa, while the administration denied that corn-for-ethanol subsidies are a major cause of the worldwide surge in food prices.
“We’re sending a clear message to the world that America will lead the fight against hunger for years to come,” Mr. Bush said in a statement to reporters in the White House.
But agricultural experts testified on Capitol Hill yesterday that high food prices are here to stay, as robust demand for food worldwide collides with record fuel costs to put unprecedented pressure on food prices.
Although the prices for basic foods like corn, wheat and oil have been soaring, the prices paid to farmers are only a small part of what consumers pay at the store. As much as 75 percent of the retail price of food can be attributed to processing, packaging, transportation and distribution. These costs have also risen substantially, mainly because of high fuel prices.
“With the average food item traveling more than 1,500 miles before reaching the final consumer, it is no wonder that food costs are increasing,” Tom Buis, president of the National Farmers Union, told the Joint Economic Committee. “When looking back over the last seven years, gasoline prices have increased 198 percent and diesel fuel prices have increased almost 250 percent.”
Of course one way to solve the gas problem, and with it, the food problem, is to build more refineries and tap into our own oil resources off of our coasts (seein’s how the Chinese and Cubans are already doing it anyway) and in Alaska – but that’s too easy, I suppose.
The other day I wrote about the Virginia governor who is actually considering raising state taxes on gas. Obama must be his mentor, according to the Wall Street Journal he intends to vote against suspending the federal tax on gas, to save the taxpayers a bit of money;
A range of economists, including Gregory Mankiw, who was chairman of President Bush’s Council of Economic Advisers, and Leonard Burman, who directs the Urban-Brookings Tax Policy Center, have criticized the proposal because it would save drivers little while encouraging gasoline consumption and depleting the federal Highway Trust Fund. Sen. Obama opposes the holiday for the same reasons.
But the political popularity of gas-price relief illustrates the uphill climb facing Sen. Obama. After making his plea Thursday at a retirement community in Columbia City, Ind., an older voter asked him why he couldn’t support a gas-tax holiday that would be funded by a tax on oil companies, as Sen. Clinton has proposed, because it would offer some short-term relief. “A lot of us are short term,” she quipped.
Sen. Obama said that a tax on oil companies should instead be used for long-term investments in alternative energy. He also has reminded voters of his proposed tax cut for middle-class families.
Yep, that sacred cow for the Democrats, tax revenue. Lord knows we don’t people to get used to spending the money they earned, they might like it. While I agree that suspending the gas tax will do little, either in the long term or the short term, even, it’s still our money – pennies or dollars, any tax cut is good. And I don’t even buy gasoline or pay for the gas that heats my home – I just want the tax cuts for everyone else…that’s how much I hate taxes.
Of course, the best way to drive down gas prices is to drive less. I haven’t seen any of that going on here in the Metro DC area. The train is still nearly empty everyday and the streets are always full of single-passenger autos. As long as people are willing to pay higher prices, the oil companies and OPEC are always willing to raise prices looking for the ceiling.
Why waste our own oil by drilling in US territory when we can just buy it from the rest of the world with our worthless IOU nothing dollars?
OPEC does not set prices. They set supply. With the prospect of peak oil looming around the corner they can do little to adjust the supply. Just another reason to buy as much of their oil now while we can and have our own supplies to fall back on when the S*^# hits the fan.
Agree on the taxes- both options are meaningless and counterproductive.
Jonn wrote: Although it’s true that OPEC sets supply, that eventually translates into prices. But we have a bottleneck at the refineries. Drilling our own resources and increasing refinery capacity would still be years away if Congress acted today, so why not start now?
Since OPEC has lost the capacity to adjust supply they have also lost the capacity to affect prices (at least in any meaningful long term way).
Taking the long view, we shouldn’t start drilling our own resources now because they will eventually become priceless when the OPEC nations’ capacity to export goes into deep decline. I say buy as much of it now as we can with our worthless paper $ before it runs out and/or they decide to keep it for themselves.
Building more refineries would just be a waste of resources since we would never see a return on that investment in infrastructure.
John, in your list of the great events of the 1970s, you forgot to mention the Thor Heyerdahl movies! The RA Expedition, sailing the Atlantic in a boat of reeds!
But nobody asks what Heyerdahl’s carbon footprint was.
sarc off/
Why can’t we build new refineries? Why can’t we drill in ANWAR? Because doing so would enrage the Democratic Party’s nutroot base. First, the enviro-nuts would freak. Then the transnational progressives would freak because America was arrograntly enriching itself without begging the U.N. for permission. The America-is-horrible crowd would begin screaming about the new neo-isolationist trend!
By adjust I mean increase
Bob,
When there are resources outside our own borders which we can consume by purchasing with meaningless dollars why waste our own? Let the Green/enviro people have their day now. When we run out of options and are forced to consume our own supplies they’ll forget about the spotted owl and opt for not freezing to death under their organic comforters in the middle of the night.
Rooney! Rooney! Right on, my man.
Jonn’s analysis is only partially correct. He’s addressing symptoms and not the disease, but I agree with the majority of his solutions…even though they will not completely solve the problem.
Rooney, though, is correct. Full exploitation of other country’s resources before tapping into our own makes sense.
To say gas prices have increased because of a decrease in supply is missing the point completely, however. If supply were the problem, wouldn’t we start seeing gas stations closing because they’d run out of gas? In other words, when was the last time you saw a gas station with the “Sorry, no gas” sign hanging out front?
The reason gas prices have increased nearly 200% since 2000 is because of inflation. Pure and simple, we are inflating our currency without fully realizing the effect it will have in the world economy. Two days ago Iran stopped selling oil in dollars, now other countries in the region are considering a similar move. If you want gas prices to stabilize (even decrease), you have to first curb inflation.
Allen,
I should be more clear- its not exactly a decrease in supply that is driving prices, but more specifically an inability to increase production. OPEC is operating at near full capacity. Demand is outpacing the ability to increase production. Inflation is playing an important role, but the increase in oil price has been much greater than the increase in gold lately.
In the short term- what’s even more important is the “war premium” we are paying due to our recklessly aggressive foreign policy.