Free Markets, Free People

Why the Obama Administration’s refusal to allow more drilling effects your food prices

Food inflation continues apace.

Question: Is there a correlation between high oil prices and higher food prices?

You bet there is:

High crude oil prices have fuelled the upward pressure on inflation since the start of this year. Consumer prices in the 17 nations sharing the euro were up 2.6 percent in March from a year ago, despite stumbling economy.

"The food price index has an extremely high correlation to oil prices and with oil prices up it’s going to be difficult for food prices not to follow suit," said Nick Higgins, commodity analyst at Rabobank International.

Energy prices affect the production of fertilizers as well as costs related to food distribution and farm machinery use.

That’s reality (What!? No solar powered tractors?).  And, as the Obama administration continues its war on cheap fossil fuels even while demand for them rises globally, you can expect costs for food to continue to rise as well.

Finally, given all that is true, who gets hurt worst by rising food and fuel prices?

That’s right – the poor and middle class.  The supposed people Obama claims to be looking out for.

So, as prices go up and you’re able to afford less and less food (and gasoline) for your family, you know who to thank.

~McQ

Twitter: @McQandO

20 Responses to Why the Obama Administration’s refusal to allow more drilling effects your food prices

  • “Finally, given all that is true, who gets hurt worst by rising food and fuel prices? That’s right – the poor and middle class.” Well as you full well know from the lessons from our resident Che-erleader, oil is a global market so clearly you are wrong. Quite obviously this must hurt most… the White House and The President. Have you seen the prices of Arugula and Kobe beef these days??? Clearly this is nothing more than Big Oil hurting the President and his pals in retaliation for the wise actions Obama has taken over the Keystone pipeline.

  • Fear not! We’ll have those solar powered wind wagons on line any decade now, any decade.

  • I have a fresh batch of pond scum maturing, so I’m doing my part for our glorious white Black President, who knows so much about economics and science, just like the Constitution, an…an…foreign affairs…an we a SO lucky to live during his reign on earth…

  • Ethanol is another cost driver. It takes more energy to produce than it provides as fuel. Corn ethanol is driving up the cost of livestock feed so beef, pork, chicken, eggs, bread are all going up. The administration is pushing E15 which will cause more small engine problems. My power washer and leaf blower needed carb rebuilds. Haven’t tried the chain saw yet. Good news is there’s an additive you can buy at WalMart that keeps ethanol damage to a minimum. Just took a trip in my wife’s X5 during spring break. One fill up outside DC cost me $104! I suspect that Obama’s mishandling of Keystone will force us to pay the world market price for Canadian oil rather than the NAFTA rate. By summer, we will be shelling out $6 per gallon.

    • @Arco The sticky note campaign….I’m liking the idea more and more. 1 sticky note left behind every time you fill up to remind the next person who to thank for ‘cheap’ gas. “Thank Obama in November.”

      • @looker

        I left four post it notes thanking fearless leader Obama. On the $104 tank, I wrote down the price. Outrageous.

    • @Arco

      Not all the energy to make ethanol is from gas or oil. Its from whatever the distillery desides to use which is probably coal or natural gas.

      As for gas, it doesn’t come without an energy cost too. There’s a cost to pump it, transporting it to a refinery, refining it, some of the oil can’t be used for gas or deisel production, then the cost of distributing it to retailers. Things accounted for in excusiating detail (based off farm equipment efficiency from a study in the 70′s usually) for ethanol, but completely ignored for gasoline.

      That 22 gallons of gas started out as 44 gallons of oil plus the energy consumed to transport it and refine it. Energy out is less than energy in, there, too I guess if you want to be silly.

      What really matters is the cost.

      As for driving the price of food, we’re not at ‘peak corn’. Not even close.

      • @jpm100 “That 22 gallons of gas started out as 44 gallons of oil plus the energy consumed to transport it and refine it. Energy out is less than energy in…”

        —Ah, that explains why the ol companies are losing money. Thanks.

      • “I guess if you want to be silly.” Which obviously YOU do. Geez, you just guess at crap.

      • @jpm100 It doesn’t only translate oil = gas – cracking gets you different products from the 44 gallons. You get motor oils, you get lube oils, you get your Vicks, etc. You get less energy out of making corn into ethanol for fuel than you do in the things you get refining petroleum, it’s pretty much that simple.

  • There is no increased demand for oil in this country—in fact national demand for oil in this country has fallen by 4.5%. http://news.yahoo.com/u-demand-oil-gasoline-sinks-jan-eia-173429617.html In fact gasoline and other fuels (as previously documented by myself on this site) are the number one export of the US.

    Therefore, pumping more oil in the US will only result in more world-wide exports to countries where demand is increasing—China, for example, where demand for oil has increased 7%.

    Any increases in world food shortages cannot be correlated with the food supply in this country, since we actually serve, in some senses, as the ‘bread basket of the world’. Modern day shortages of commodities these days are not represented by traditional supply/demand issues, but as market speculation manipulation.

    • @tadcf Gawd, you are an idiot. “Shortages” are caused by governments, as are “surpluses”. “Speculation” is something you vaguely nod in the direction of, without the SLIGHTEST comprehension of what is happening in futures markets. If you introduce MORE supply to meet constant demand…YOU GET LOWER PRICES, you stupid phuc. And IF you have greater DOMESTIC supply, you are LESS reliant on possibly HOSTILE OR SEVERABLE supply. Other than that…we agree totally.

      • @Ragspierre I have to admit that the Che-erleader’s comment this time was a real humdinger of confusion and misdirection. The force is definitely strong in this one, she must be an advanced student of Buffy Studies at Farmington.

        • @DocD Now see, here’s where we have to disagree. I think it’s a male, a great many women are keenly aware of the increases in the cost of fuel and food because they see it themselves first hand as the primary purchaser of food for their families. Whereas dudes living in their parent’s basement hardly notice so long as the Ho-Ho supply line seems to be operating properly and the internet stays up.

        • @looker Urrk, yeah I think you are right. A quick google seems to confirm that… and the use of the term “douchenozzle” in relation to the Che-erleader’s comments elsewhere :D Ha ha ha. The interwebs never let the good stuff die.

      • @Ragspierre The good news is that was probably today’s single pass by “washing machine charlie”.

    • @tadcf “In fact gasoline and other fuels (as previously documented by myself on this site) are the number one export of the US.” Right! Good work! and where do we get Gasoline? from OIL! So if we’re making more gas for export, it means we have to import more OIL to make the gasoline. Get it? It’s not that hard, but it’s pretty clear that connecting the dots isn’t your strength based on a review of your posting on livefyre
      ==============================================================
      As to crops – yes, again, indeed. Let me guess you don’t have, and never have had, anything to do with food production. It takes FUEL to prepare, cultivate, fertilize, harvest, transport for processing, transport for final product to retail. ALL of those things take FUEL. So when the price of FUEL rises, the price of everything else rises to compensate for the increase in cost of creating and delivering FOOD. And then, there’s the turning of food crops into FUEL because of government mandates so corn that USED to be a food source is NOW a fuel source (and one that costs more to create than it returns in energy). Talk about being wildly out of touch – you really need better handlers. Demand quality in your briefings will you?

    • @tadcf “Deliver 800,000 barrels per day ready for export in the form of both crude and gasoline. (Gas and other fuels are still the number one US export.)”

      Here, that’s you, about 2 weeks ago You’ve got us exporting crude, I presume if we’re exporting it then the demand HERE has nothing to do with anything and would be based on the export demand. – were you wrong then, or are you wrong now? I suppose it’s whatever the narrative demands, so don’t bother to clarify.