Rising fuel and food prices

June 17, 2007 - Leesburg Indiana - HoJo Press

I am also emailing this to my entire address book.

The food/energy crunch is upon us. Evidenced by the immediate prospect of four dollar per gallon gasoline and five dollar per gallon milk (and the promise that both will continue to rise) Americans are becoming aware of something this writer wrote and spoke about at least twenty years ago. I did not think then it would happen so soon, predicting the crunch for somewhere around 2040. Increasing shortages of petroleum, a limited resource, has combined with increasing use of biofuels, another limited resource, as promoted by the President (and many politicians and environmental activists) to create a major crisis in both the energy and food industries. Read one article about what is going on at:

http://news.yahoo.com/s/ap/20070617/ap_on_bi_ge/ethanol_refineries

This article is mainly about oil companies and refineries and, as usual, politicians are taking pot shots at oil companies and threatening punitive and corrective actions. Haven’t those politicians and their buddies in the media done enough damage to that industry already? First, they impose massive controls and restrictions on refining and prospecting for oil which is the real cause for much of our dependence on imported oil and lack of new refineries. Wasn’t that their real goal in the first place– to punish Big Oil for making impacts? Or do they and their co-conspirators in the media merely play the blame game and do it specifically to divert attention from their own miserable, self-serving actions. (Check out some earlier postings in this BLOG>)

I’m no fan of Big Oil, but doesn’t it seem logical to suppose that a for profit company of any kind would then do those things that made for high profitability and not make the huge investment required to build refineries? The monumental effort and investment they did make was in internal expansion of existing refineries. If not for that we would certainly now be importing most of our gasoline at world prices far above what we now pay. Add to that the very real threat our government makes to soon have 20% of our gasoline replaced by biofuels and you have a force that is a real threat to the profitability of adding refinery capacity. I doubt any of you would buy a home where there was a very real threat to reduce the value of that home by twenty percent in the very near future. Unless for charity, you wouldn’t go to work for anyone without pay (or profit). Also, you would not take a job you knew would soon be replaced. So why would you expect any company to do so? Those companies are made up of people just like you.

There is another force acting in this energy equation that will negatively impact everyone’s pocketbook. Not so obvious, but very real nevertheless, is the sharp boost in food prices brought about by just the threat of the increasing use of biofuels. About thirty miles south of me a huge plant is rising out of the cornfields along I-15. No, it is not an ethanol plant like at least twelve now built or being built in our state. It is a biodiesel plant which will convert soy beans into diesel fuel. The big difference between biodiesel and ethanol is that it can go directly into the fuel tanks of virtually all present diesel vehicles with no modification! Also, a soy bean oil plant is much simpler and cheaper than an ethanol plant, uses less energy per energy equivalent of ethanol, doesn’t produce carbon dioxide as a by product, and gives off fewer pollutants. This huge plant, scheduled for opening late in the year, will use as much as thirty percent of Indiana’s soy bean crop. I have no idea if they are on schedule but looking at the plant as I passed it yesterday, I seriously doubt it.

Already, soy bean futures are climbing along with corn futures. That’s great for Indiana farmers– farmers in all grain producing states– but does not bode well for food producers and the buying public. With milk soon to pass five bucks a gallon and other food products also on the rise, the public, and especially those governmentalists who look to the government for solutions to every problem, will soon be shouting, “Do something!” It’s already been noted by the media with their usual predictions of doom and crisis.

I am beginning to wonder about existing grain supply contracts with China and many other nations who cannot produce enough food for their people as it is. Because of population growth, many once food exporting nations have become food importers in recent years. How do you suppose diverting 30% of our raw food production into fuels will affect the completion and renewals of food export contracts. I’ll wager China will not be very happy– in spades! If five buck a gallon milk is here now, how soon do you suppose two dollar a dozen eggs will be a common reality? How about five bucks a box cereal?

OK, so I’ve described the problem. How about a solution? Well, I’ve been working on not one, but a whole complex of interwoven solutions. This is not a simple problem. It has many tentacles reaching into many aspects of our economy and our lives. You all know of what I speak. “A Convenient Solution” should be published by year’s end.
(for info, click on http://superh2ee.blogspot.com/)

No, it is not really a solution, but it is a collection of facts that could lead to several. The best thing government could do is to encourage private enterprise to work on it, grease the skids for as many of the proposals as could come out of it, not waste money on dead ends for political purposes, and just get out of the way. American ingenuity and can do spirit will provide the practical solutions, make a little profit (or maybe a lot), put many Americans to work in high paying jobs, boost our real economy and, as long as taxes stay low, provide a huge boost to tax income. In fact, this is already happening. (See the new innovations I found out about and recorded in the last portion of my book.)

I wonder why the media hasn’t been shouting about the fact that all but a few states are not only in the black, but are now having huge and growing surpluses– a very new thing. Thank you George Bush for those tax cuts. (Democrats insisted they would wreck our economy, remember? They were wrong as usual) Now these Democrats promise to demolish this economic miracle with huge new taxes. No wonder Congress has an approval rating far lower than Bush. Why doesn’t the media ever mention that? They shout about Bush’s low rating but never mention the dismal record and even worse approval rating of the Democrat controlled Congress. Harry Reid and Nancy Pelosi each have ratings even lower than all of Congress. Hmmmmmmmm?

I’ll be interested to receive responses. Does anyone even care?

Happy father’s day!

Ho