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.
In many cases, there’s not much government can do to stem the rising price of gasoline. But there’s also pure BS afoot when it claims the following:
Michael Bromwich, the chief regulator for US offshore drilling, on Monday waded into Washington’s growing debate about high oil prices, saying his agency’s pace of reviewing oil and gas exploration plans has no relation to the rising cost of gasoline.
"Even if we permitted the hell out of everything tomorrow — every pending permit, some permits that haven’t even been filed yet — it would not have a material effect on gas prices," Bromwich said. "That’s the simple, clear reality."
Bollocks. Anyone remember what happened when the Bush administration announced that it was opening the Outer Continental Shelf along both the east and west coast to drilling? High oil prices immediately began to drop. That’s because those who speculate on oil were speculating on long-term scarcity – building demand with, at best, the same amount of oil produced. Such an announcement makes that premise questionable.
And despite claims to the contrary, it doesn’t take 10 years to bring a well in. Depending on where it is, that can be done in a matter of months or a couple years. So it dampened the speculation by promising increased production of oil. Econ 101.
So Bromwich’s claims are nonsense. Perhaps if they “permitted the hell out of everything tomorrow” it might not have as deep an impact on oil prices as the Bush declaration did, but it would certainly have a positive downward effect on oil prices.
Oh, and if governments are truly concerned about gas prices and how they can keep a little more money in your pocket, a gas tax roll back is always something they can consider:
Yeah, that’s not going to happen – so Californians, Illini, New Yorkers? Remember that over 60 cents of the cost of a gallon of gas in your neck of the woods is taxes. And that’s something government has full control over.
So now what?
We had the tough talk from Obama and the State Department about “new” sanctions designed to bring Iran to its knees over the development of nuclear weapons.
But now the administration is face with walking the walk concerning those sanctions. And apparently Turkey isn’t at all worried or concerned about the US’s reaction:
Ankara will continue to permit Turkish companies to sell gasoline to Iran, despite US sanctions against fuel exports to Islamic regime, Reuters reported on Wednesday.
"If the preference of the private sector is to sell these products to Iran, we will help them," said Turkish Energy Minister Taner Yildiz.
Tupras, Turkey’s sole oil refiner and gasoline exporter, expressed little fear of retribution from US Treasury officials who have the power to ban sanctions violators from accessing the US banking system or receiving US contracts.
"For us, Iran is more important than America because we get crude oil from them. We don’t get anything from America," a Tupras official was quoted as saying.
It seems that Turkey has figured out that our new motto is “Speak loudly and carry no stick”. No fear and certainly no respect is shown in the statement by the Tupras official. And Minister Yildiz is obviously waving away any official concern with his statement.
Two things are demonstrated by their stance. A) Turkey is “all in” in it’s support of the “Islamic world”. It has obviously made a choice between the being a part of the coalition of Middle Eastern Islamic countries and the West and NATO. B) Turkey has been given absolutely no reason to believe we’ll actually enforce our sanctions and thus demonstrates no respect for them or the US.
I’m not sure that would have been the case 2 short years ago. While Turkey was certainly moving away from the Western orbit at the time, their overt hostility to the US wasn’t at all evident. And my guess is they knew the US would enforce sanctions then. However, they have deduced that the US is a weak horse right now, and they plan to build their credibility in Middle East at our expense. Defying the “Great Satan” is a great way to do that.
And, of course, there’s the China problem. China too is shipping in gasoline. So in order to enforce sanctions against Turkey the US would have to do the same against China. Oh – and our “good friends” the Russians as well. Yeah, that’s right, Russia and China are both selling gasoline to Iran, and have come to no harm. What’s the risk of bucking the US? Turkey figures it to be nil. And, it appears, they’re right.
The tough “new” sanctions, it appears, are a farce and our “friends” see no risk it flouting them. It sort of boils down to the old western adage of “if you’re going to wear a gun, you have to be ready to use it”. Apparently these three have figured out the gun the administration is wearing is empty.
There’s something to be said for respect and fear in foreign policy – but you have to actually do something (or be willing to do it) before the world community will heed what you say. This administration’s weapons are words, not deeds. And the expected result is on display in this little scenario, a scenario that you can expect to see replayed over and over and over again as long as it is in power.