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.
Not that President Obama will much care.
As you know, if you’ve followed the news, a few months back, President Obama stopped the building of a critical oil pipeline from Canada’s oil sands in a fit of pique at the GOP for demanding a decision sooner rather than later. His excuse was it hadn’t been studied enough even though his own State Department had unofficially announced they were satisfied with Trans Canada’s application and environmental studies and prepared to okay the project.
A huge outcry ensued and as he usually does, Obama tried to blame his decision on someone else. The result of his decision, of course, was to further delay the transport of up to 800,000 barrels a day of crude oil from Alberta’s oil sands to our Gulf Coast refineries. He essentially turned down an increase in safe and secure oil that is strategic to our economic growth and national security.
But it has had even more profound effect for the long term. Most people are pretty sure that the pipeline will eventually be built. However the sweet deal it offered us prior to the President’s turn down is no longer available. It is because the refusal pointed out that Canada couldn’t depend on the US to be a reliable trading partner:
In a public one-on-one interview here with Jane Harman, head of the Wilson Centre think-tank, [Canada’s Prime Minister Stephen] Harper said Obama’s rejection of the controversial pipeline — even temporarily — stressed Canada’s need to find other buyers for oilsands crude.
And that wouldn’t change even if the president’s mind did.
“Look, the very fact that a ‘no’ could even be said underscores to our country that we must diversify our energy export markets,” Harper told Harman in front of a live audience of businesspeople, scholars, diplomats, and journalists.
“We cannot be, as a country, in a situation where our one and, in many cases, only energy partner could say no to our energy products. We just cannot be in that position.”
Of course there’s no particular problem finding new customers. China, naturally, was waiting in the wings for us to shoot ourselves in the foot and when we obliged them, they stepped right in.
That, of course, has another effect:
Harper also told Harman that Canada has been selling its oil to the United States at a discounted price.
So not only will America be able to buy less Canadian oil even if Keystone is eventually approved, the U.S. will also have to pay more for it because the market for oilsands crude will be more competitive.
That’s right, we get less and it will cost more.
We have taken a significant price hit by virtue of the fact that we are a captive supplier and that just does not make sense in terms of the broader interests of the Canadian economy," Harper said. "We’re still going to be a major supplier of the United States. It will be a long time, if ever, before the United States isn’t our number one export market, but for us the United States cannot be our only export market.
"That is not in our interest, either commercially or in terms of pricing."
Congratulations Mr. President, with your childish fit of pique you’ve managed to again do something that will help achieve your goal of seeing energy prices “skyrocket”.
And the people you profess to be looking out for, the poor and middle class, are those who will pay the most for your tantrum.
Because, as you know, the laws of supply and demand can’t be repealed, no matter how much some want that to be true.
Today, the EPA will act to make electricity more expensive.
The Environmental Protection Agency will issue the first limits on greenhouse gas emissions from new power plants as early as Tuesday, according to several people briefed on the proposal. The move could end the construction of conventional coal-fired facilities in the United States.
The proposed rule — years in the making and approved by the White House after months of review — will require any new power plant to emit no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.
If you can’t get Congress to pass a “cap and tax” law, then simply go it alone and direct executive agencies to implement regulation which will cap CO2 by making it too expensive to operate if the plant produces CO2 above the arbitrary limit you set.
“After Congress refused to pass carbon caps, the administration insisted there were other ways to skin the cat, and this is another way — by setting a standard deliberately calculated to drive affordable coal out of the electricity market,” Popovich said.
And that’s precisely what Obama’s done here.
Well it gives lie to the “all-of-the-above energy plan” that Obama has been pushing in stump speeches around the country:
Industry officials and environmentalists said in interviews that the rule, which comes on the heels of tough new requirements that the Obama administration imposed on mercury emissions and cross-state pollution from utilities within the past year, dooms any proposal to build a coal-fired plant that does not have costly carbon controls.
“This standard effectively bans new coal plants,” said Joseph Stanko, who heads government relations at the law firm Hunton and Williams and represents several utility companies. “So I don’t see how that is an ‘all of the above’ energy policy.”
Nor do I.
And it will have a significant effect:
The proposal does not cover existing plants, although utility companies have announced that they plan to shut down more than 300 boilers, representing more than 42 gigawatts of electricity generation — nearly 13 percent of the nation’s coal-fired electricity — rather than upgrade them with pollution-control technology.
Michael Brune, executive director of the Sierra Club, said the new rule “captures the end of an era” during which coal provided most of the nation’s electricity. It currently generates about 40 percent of U.S. electricity.
So the war on coal continues apace despite claims of an inclusive energy policy.
This is a preview of a 2nd Obama term. As mentioned yesterday, public opinion will be of no consequence in January 2013 if he’s re-elected. Hence, there’ll be no need to concern himself with it again. 4 years of unilateral action by agencies such as the EPA can certainly be expected:
The EPA rule, called the New Source Performance Standard, will be subject to public comment for at least a month before being finalized, but its backers said they were confident that the White House will usher it into law before Obama’s term ends.
“The Obama administration is committed to moving forward with this,” said Nathan Willcox, federal global warming program director for the advocacy group Environment America. “They’re committed to doing it this, and we’re committed to helping them do it.”
And from none other than Mr. Etch-A-Sketch:
“Apparently, the slipping poll numbers have convinced him [Obama] to announce the lower half of that pipeline,” Romney said. “If we can get his poll numbers just a little lower, we may be able to get the other side, too. So let’s get that job done.”
A reminder, one more time with feeling – the portion that Obama is now for doesn’t need his permission or approval to be built.
Just to be clear.
This is a blatant and obvious political attempt to pretend he’s behind something that was going happen anyway. But, of course, we knew that, didn’t we?
Steve Ratner, Obama’s former "car czar" blurts out something we’ve been trying to point out for quite some time:
“All of the above” isn’t a policy, it’s an attempt to avoid criticism in an election year.
It just gets better and better:
President Obama will tout investments in “renewable” energy Wednesday at the local Copper Mountain Solar 1 plant, although the plant has only five full-time employees.
The plant, owned by San Diego-based energy company Sempra, was built in late 2010 at a cost of $141 million. Funding included $42 million in federal-government tax credits and $12 million in tax-rebate commitments from the state of Nevada.
Construction of the plant involved over 300 part-time jobs, but currently only five full-time employees operate the plant, a Sempra spokeswoman confirmed. That comes out to $10.8 million in tax-dollar subsidies per employee.
Nationally, solar energy is unlikely to help the president achieve his goal of lower energy costs. Geoffrey Lawrence, deputy policy director at the Nevada Policy Research Institute, the free-market think tank that publishes Nevada Journal, noted in his Solutions 2013 report that, even according to the U.S. Department of Energy, solar-PV energy will cost three and a half times more than energy from traditional sources such as coal.
“President Obama’s visit to the Solar 1 Facility in Boulder City is the perfect illustration of why the president’s economic policies are such a failure," said Andy Matthews, president of NPRI. “The government has spent over $50 million to ‘create’ five permanent jobs and build a plant producing a product — expensive solar energy — that no one would purchase without a government mandate.
“That’s not a path to a vibrant economy; it’s the road to serfdom. This mindset — of government attempting to pick winners and losers in the economy through subsidies and regulation — is a major reason why the national unemployment rate is at 8.3 percent, Nevada’s unemployment rate is 12.7 percent and the national debt is over $15.5 trillion.”
But hey, here we are “winning” the Charlie Sheen way.
Again, does anyone wonder anymore why, despite their rhetoric, Obama and Secretary Chu are just fine with gas prices going up?
How do you know when a president’s energy message is falling flat?
When you see him trying to involve himself in something that doesn’t need him or his permission to proceed.
President Barack Obama plans to announce in Cushing, Oklahoma, on Thursday that his administration will expedite the permit for the southern half of the Keystone XL pipeline, a source familiar with the president’s announcement told CNN.
In January, the Obama administration denied a permit for the 1,700-mile-long Keystone XL oil pipeline, which would stretch from Canada’s tar sands development to the U.S. Gulf Coast. That decision was met by persistent Republican criticism that the president has not been doing everything possible to create jobs and combat high gas prices.
Late last month, TransCanada, the company behind the Keystone XL Pipeline, announced it would move forward with the process to build the southern half of the pipeline, which would begin in Cushing – the president’s third stop on his two-day energy tour. The White House praised the move.
Senior administration officials would not confirm the president’s plan to unveil the effort to cut red tape for the project, though one senior administration official acknowledged the need to deal with the glut of oil in Cushing, where oil from the Midwest hits a bottleneck as it is transported to the Gulf of Mexico.
This is much like his attempt to take credit for increased oil production when he had no hand in that increase, and, in fact, saw production increase despite his administration’s efforts to slow it on Federal lands.
This part of the Keystone pipeline is approved and ready to go. It has been. The company was merely waiting on the final go ahead for the portion that crosses the border from Canada. And while the portion being built from Cushing will be helpful, still missing is the portion that could be delivering up to 800,000 barrels a day from the oil sands of Canada. This, as usual, is a diversion.
Oh, and does anyone understand what “red-tape” the administration is talking about cutting? Why all the red tape this administration has strung all over the process since it has taken power, of course.
An amazing performance. Net gain – not much if anything in terms of total oil produced. The oil will get to market somewhat faster and certainly in a more environmentally safe way, but it still does nothing to increase the supply of safe oil that would actually lessen our dependence on oil from unfriendly countries.
Well the Washington Free Beacon has an idea:
President Obama’s most recent green energy fixation—algae—may suffer from the accusations of cronyism that have plagued his broader effort to promote non-fossil fuel energy sources through massive federal subsidies.
May suffer? Read on:
Solazyme, a San Francisco-based firm that specializes in the plant matter, has received more than $25 million in federal grants and contracts as part of Obama administration’s controversial stimulus package, and is poised to receive millions more as part of the president’s recent efforts to promote green biofuels such as algae.
The firm employs a former member of the Obama-Biden transition team who, according to one online bio, “played a key role in developing the energy provisions in the economic stimulus bill.”
That’s right, the usual – crony capitalism. And in this case, you get a twofer. San Fran Nan’s district benefits.
Be nice if the guy who claimed he was going to change “politics as we know it” wouldn’t revert to “politics as usual” at every opportunity to pad his re-election campaign and help out his cronies, huh?
As I’ve noted any number of times, there are polls which mean nothing (such as polls this far out comparing an incumbent president and GOP nominees) and there are those what present indicators or trends that give one insight into the prevailing mood of voters or the like.
The Hill produced one of the latter this past week. Obviously a snapshot of the prevailing mood right now, it is not a poll with which the Obama campaign should be happy.
The poll indicated that 49 percent of likely voters said they expect a court ruling that is unfavorable to the Affordable Care Act, while just 29 percent think it will be upheld and 22 percent aren’t sure.
On economic issues, 62 percent of voters say Obama’s policies will increase the debt, while 25 percent think they will cut it, and by a 48-percent-to-38-percent margin, voters believe those policies will increase joblessness rather than put people back to work.
On energy, 58 percent say Obama’s policies will result in gasoline prices increasing, while just 20 percent expect them to cut prices — and by a 46-percent-to-36-percent margin, voters believe they will cause the United States to become even more dependent on foreign oil.
Now as far as I’m concerned, those are the three issues that are likely to (or should) dominate the election once a GOP nominee is decided on. If they’re not, and the GOP allows the Democrats to frame the campaign on issues other than those, they stand a good chance of losing.
Regardless of the outcome in the Supreme Court, ObamaCare remains very unpopular with a majority of the population. The economy is one of those issues that is personal. Despite media hype, voters judge the state of the economy on a personal level. The “official unemployment number” can be made to look rosy, but in fact real people who are still unemployed or underemployed know who they are. They are the real number and they’re not going to be happy with the state of the economy.
Finally, the energy tap-dance that the administration is doing is obviously failing. Obama is failing miserably passing off the blame about gas prices if 58% are saying his “policies” are the problem. True or not, perception is the rule. Oh, and, frankly, it’s true. See for yourself.
When you have consistent polls that say a vast majority of voters are unhappy with a president’s signature piece of legislation, that’s a place you focus your campaign. When you have two important issues – the economy and energy – where significant majorities are down on the incumbent for his policies, you hammer that unmercifully.
This poll is an indicator of the issues the GOP should build its campaign around. These points should be pushed relentlessly.
Porn, contraception and other wedge issues should be avoided. Sorry, but they’re net losers and true distractions. They let the left frame the discussion and trust me, that’s where they’re going to take it every time.
Oh, as an aside, if you’re interested in what a useless poll looks like, check this one out. Justices appointed to lifetime positions are hardly worried about “popularity”. In fact, that’s the primary reason for such appointments. While the poll may indicate public dissatisfaction with some rulings, it may also simply indicate a partisan divide. But for the most part, it is irrelevant.
But that shouldn’t come as a particular surprise for anyone who has watched this economist turn into a political hack over the years.
To be a modern Republican in good standing, you have to believe — or pretend to believe — in two miracle cures for whatever ails the economy: more tax cuts for the rich and more drilling for oil. And with prices at the pump on the rise, so is the chant of “Drill, baby, drill.” More and more, Republicans are telling us that gasoline would be cheap and jobs plentiful if only we would stop protecting the environment and let energy companies do whatever they want.
You’ll not see such a broad field of strawmen erected in such a short paragraph for quite some time.
Anyone know any Republicans who are calling for “more tax cuts for the rich” (as I recall, Republicans are saying no tax increases for anyone)? That’s the first strawman.
Second? Not a single “Republican” I know is claiming that we should “stop protecting the environment” and “let energy companies do whatever they want”. I defy Krugman to produce them. Instead what I see are those that want more drilling point out that the technology exists to do it safely and in an environmentally friendly way and thus there’s no real reason to stop it other than ideology. Nor do I know of any who oppose the pursuit of alternative fuels. They just are realistic about the fact that none of those being pursued are anywhere yet ready for prime time, unlike our President. So they naturally look to what we have as the main staple of our economy’s energy demand now and in the near future.
It’s called “common sense” for the Krugman’s of the world who seem to have not been blessed with much of it.
As for jobs and cheaper gas, you should be able to ask an economist if increased supply of a commodity would have the effect of downward pressure on cost and expect to get an honest answer – unless it’s this guy.
Oh, and you’d also expect an economist to understand that if you expand production of any such commodity which is labor intensive, you’re going to create a lot of jobs. You may expect that, but you too can read this so-called economist’s words. When the choice is between political hackery and economic integrity, guess which he chooses?
Charles Krauthammer lays out a little ground truth about why “drill, baby, drill” hasn’t been able to have the effect it might have had if allowed. Yes, “allowed”:
President Obama incessantly claims energy open-mindedness, insisting that his policy is “all of the above.” Except, of course, for drilling:
●off the Mid-Atlantic coast (as Virginia, for example, wants);
●off the Florida Gulf Coast (instead, the Castro brothers will drill near there);
●in the broader Gulf of Mexico (where drilling in 2012 is expected to drop 30 percent below pre-moratorium forecasts);
●in the Arctic National Wildlife Refuge (more than half the size of England, the drilling footprint being the size of Dulles International Airport);
●on federal lands in the Rockies (where leases are down 70 percent since Obama took office).
But the event that drove home the extent of Obama’s antipathy to nearby, abundant, available oil was his veto of the Keystone pipeline, after the most extensive environmental vetting of any pipeline in U.S. history. It gave the game away because the case for Keystone is so obvious and overwhelming. Vetoing it gratuitously prolongs our dependence on outside powers, kills thousands of shovel-ready jobs, forfeits a major strategic resource to China, damages relations with our closest ally, and sends billions of oil dollars to Hugo Chavez, Vladimir Putin and already obscenely wealthy sheiks.
The opportunity to see gas at a lower price, plentiful jobs created and supply increased have been squandered by this administration and Krugman, as if channeling our President, is trying to pass this failure off on the GOP. He’s essentially trying too claim the laws of supply and demand have been suspended.
The irony here is that these claims come just as events are confirming what everyone who did the math already knew, namely, that U.S. energy policy has very little effect either on oil prices or on overall U.S. employment. For the truth is that we’re already having a hydrocarbon boom, with U.S. oil and gas production rising and U.S. fuel imports dropping. If there were any truth to drill-here-drill-now, this boom should have yielded substantially lower gasoline prices and lots of new jobs. Predictably, however, it has done neither.
Again, a half-truth. The boom is a boomlet compared to what it might have been had Obama and his merry permit slow-walkers gotten out of the way. The only thing that has saved Obama is the boom on state and private land. What Krugman won’t say is it is most likely true that had that boom not materialized on non-Federal land, gas prices would be even higher. And so would unemployment. Don’t forget the tens of thousands of jobs lost due to the Obama administration’s Gulf “permatorium”.
Krauthammer points out what should have been obvious to an economist but are inconvenient truths to a political hack:
“The American people aren’t stupid,” Obama said (Feb. 23), mocking “Drill, baby, drill.” The “only solution,” he averred in yet another major energy speech last week, is that “we start using less — that lowers the demand, prices come down.” Yet five paragraphs later he claimed that regardless of “how much oil we produce at home . . .that’s not going to set the price of gas worldwide.”
So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does. Does Obama read his own speeches?
Obama says of drilling: “That’s not a plan.” Of course it’s a plan. We import nearly half of our oil, thereby exporting enormous amounts of U.S. wealth. Almost 60 percent of our trade deficit — $332 billion out of $560 billion — is shipped overseas to buy crude.
Drill here and you stanch the hemorrhage. You keep those dollars within the U.S. economy, repatriating not just wealth but jobs and denying them to foreign unfriendlies. Drilling is the single most important thing we can do to spur growth at home while strengthening our hand abroad.
It is truly wondrous to me how poorly Krugman comes off in these sorts of debates. He concludes his hack job with:
And intellectual bankruptcy, I’m sorry to say, is a problem that no amount of drilling and fracking can solve.
The irony is so thick you could cut it with a knife.