The Rising Costs of Food and Energy: When will Greed reach critical mass?
Posted: Sunday, June 22, 2008
by Jon Searles
Food and energy prices have been rising at an alarming rate over the last year. The increases have caused serious problems in the U.S. economy and the economies of countries throughout the world. With the exception of some princes in Saudi Arabia, most have felt the financial burden that the increased prices and shortages have caused. What is even more amazing to me is that the experts, media, and doomsday pundits did not see it coming and now are amazed by its arrival. I used to tell a story that I heard in Sunday school about a frog and a spaghetti pot. If you put a frog in cold water in a spaghetti pot, put it on a stove, and turn on the burner, the frog will not jump out as the water temperature increases and will eventually die in the hot water. The frog's body is changing temperature slowly as the water temperature increases, but it is too late when he realizes there is a problem, he is frog stew. I used it in a spiritual analogy to show my youth group how the world can slowly corrupt you. That is how I feel we have also arrived where we are now.
1. Oil prices have continued to increase to above$130 a barrel. This increase has been seen in the cost of fuel. Fuel surcharges and increases in the prices of all consumer goods transported throughout this country and the world are a result of this steep increase in the cost of a barrel of oil. We have watched the news and been told that there is plenty of supply and that oil producing countries will only minimally increase output, but yet speculation continues to artificially drive up fuel costs.
2. Increase in oil prices causes pressure on food by increasing ethanol demand. A desire to supplement oil supplies with fuel alternatives has increased the demand for ethanol. Ethanol is produced from corn. Corn prices have hit record highs even with increases in corn supply. The supply has not gone to food but to energy.
3. The increase in corn production has decreased crop production of other crops such as wheat and soybeans and resulted in increases in these products. Corn is king in ethanol production and farmers have turned to this cash crop to make more money.
4. Palm oil competes in 0 grams of Trans fat and energy supply. A Virgin Airlines flight used a bio-fuel blend that included palm oil, soy, and corn oils. Increased focus on non ethanol bio-fuels will put pressure on food and land resources. Increased deforestation to increase crop land availability. Palm oils which recently became the food craze for 0grams of Trans fat diets are not just in demand for food products.
5. Open world economies in countries such as China and India have pressure prices. Large populations demand large amounts of food. As western food supplies become more available for export in the world economy increase food prices have been seen in fruit, wheat, milk products, and egg products produced in the United States. This has driven prices up over the last two years. A pound of whole eggs moved from the mid 50 cents per pound to over 1 dollar per pound. Wheat has doubled in price as seen in the price of bread, cereals, and pizza.
6. Food speculation drives up prices just like oil speculation. Along with the increase in demand for food products, speculators are pushing up the price of food items by speculating on crop supplies in wheat futures, corn futures, and anything else that can be traded electronically. Several Asia countries are considering setting up a "rice cartel" to help develop set pricing for rice much like countries set prices on oil. High prices are causing widespread starvation in areas where rice, and wheat are staples in a meager diet.
7. Natural disasters throughout the world continue to drive up prices. Floods, like the ones currently damaging crops in the United States and those that have hit fruits and vegetables in South America will continue to drive prices up until supply can increase and push them down. Supplies do not increase quickly and many items will not recover until the next growing season.
It seems as though all the stars have aligned perfectly to cause the increases we have seen over the last few years. There are several other pressures on the US Economy that has helped to influence the prices we pay and the deficit we build. Blend in a costly war in Iraq, continued demand for higher wages and benefits for workers in the United States, laws decreasing availability of the lower cost work force of migrant and illegal workers, and the mortgage crises and you will see a bleak picture that will require time to recover.
I am by no means an economist, but I can discern from the available information that the increases are the result of two main factors.
1. Greed- It is one thing to make money and another to make it at the expense of the lives of others. We are there now as food prices increase possibilities for starvation as oil companies and speculators reap profits above and beyond anything they need to operate.
2. Technology block- Green is in as we look for ways to power our vehicles with alternative energy sources. Green is only in because of the costs associated with the current alternative. We were able to develop propane vehicles (forklifts), and electric vehicles (golf carts) because markets demanded the cleaner, lower cost alternative years ago, but as long as oil was cheap and plentiful and government relationships were based on oil, no one was interested in moving vehicles with anything other than gasoline. Technology now has to play catch up since the powers involved only gave hollow promises to develop alternative fuel ideas. If you want to know why, read number 1.
At this point it would be easy to point our fingers at others and declare that global warming is also contributing to the difficult times. We only need to look in the mirror to see who motivated those to greed and technology block. Unless you don't own a car, computer, television, or cell phone, never purchased anything at Wal-Mart, eat only organic foods you grow, use no chemicals, live without electricity and somehow recycle the smoke from your wood burning stove as well as create zero waste as you properly recycle and compost, you have helped cause the current crisis. Some more than others, but all together we are the culprits. I guess if you were not one of those who have helped cause the current predicament, you would not be reading this today.
So, what do we do? I and people much, much smarter than I have some ideas but unless this article is read by millions of people that are focused and committed to solving these issues and sharing ideas with those they know, we will have to rely on the money to make the changes for us. There is a breaking point for every economy and we are working to test what the breaking point is for this current economic quandary. Now, when will greed hit critical mass so we can get out of this mess?
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Top-level comments on this article: (4 total)Jon, I'm pretty convinced that the rich are recouping their losses from the real estate meltdown and maybe even the tech bubble. When they do, we may see prices come down again but never to pre-meltdown levels. In the meantime we are in the midst of a middle class wringing out and it won't stop until they feel they have enough of their money back. Whether we contributed to the melt down or not, we're all being forced to pay a share. Missing LinkPlease log in to respond to this comment.
Hi Jon. Zig Ziglar said, "When you respond to life that's positive. When you react to it, that's negative." Our leaders respond after the fact. Prior to that, they take advantage of your #1. Greed. Robert Melaccio has been saying that for some time. I'll take a discerner over an economist any day. Simple facts presented here, Jon in an interesting read. Thanks! Praying all is well. :)Please log in to respond to this comment.Avis, thank you for taking the time to read these ramblings. I know Robert Melaccio has some strong views on this subject. I just wish there was a way for day to day people to make real change in the economy (and politics). Imagine a world where greed was non existent and humility was common. Thanks again.Please log in to respond to this comment.
I appreciate Avis and her comments, she is always most kind. You hit the nail on the head in this article. It amazes me nothing is done about it. That is the real issue here, why? Much talk but no action except when it favors business and trade. What is the agenda? Rhetorically one must believe there is an another agenda. These are not ignorant people. Well if one just vists what they have done and failed to do you have your answers. You must come to the conclusion they don't want to. There is so much in the news to be gotten you would be amazed at it all. I have so much to write to I can't fit it all in and I am a shutin with time to do it. To actually believe things will change through these candidates, Congress and two partries is, well what words can one use? We were worned by our founding fathers about two party control and here we have it. It is all there to be had in the history books. It will not change until We the People take back our nation. It is as simple as that. Spread the word and Vote them out, period! We can do no worse. Best regards.Please log in to respond to this comment.
hi jon, i'm depressed over the current status of our world, and our united states, not just for me, but for my young adult children, making 7 something an hour, and paying 4 of that for each gallon of gas. everything is more expensive, and they, thinking they should be on their own at 22 and 20, are having a really hard time. i don't have the answer, but i'll be praying for it, just don't shut my Wal-Mart down :) thanks for a very well written, interesting article, best regards, sue thomPlease log in to respond to this comment.
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