I'm taking a break for a short time from the hymnody (partly to see if there is any feedback) and will write a few items on things that are on my mind. One that puzzled me recently was this whole ethanol thing.
How does this work? Arizona State University did a study recently to figure out why tortillas were rising in price so drastically in Mexico. As it turns out, the price of the cheapest "bread" in Mexico has steeply risen because of the demand for corn ... in the United States. Yeah, we have this massive demand for ethanol from corn, so we're driving up the price of corn in Mexico to get it. Of course, we're driving up the price of corn in America as well. And this has its ripple effect. Poor people in Mexico find it harder to afford their own cheap food. In the U.S., the corn that would have fed our beef costs more, so beef goes up. The corn that we would have eaten is more expensive. And it doesn't stop at corn or beef.
Since the demand for corn is raising the price of corn, there are more farmers growing corn. Makes sense. But they are doing so at the cost of other crops. So now there is less of these other crops, and the decrease in their supply increases their cost. And then there are those other places that corn is used. They feed corn to pigs. Check your pork prices. They feed corn to chickens. They keep chickens for their eggs. As the cost of feeding chickens go up, so will that chicken breast and dozen eggs. And so on. In our drive to ease our demand on petroleum, we are driving up prices everywhere. And will we become dependent on other countries for corn?
I don't get it, really. There has always been ethanol in gasoline, at least for some time now. For as long as I can remember there has been a sign on the pumps I visit that tell me there is 10%. Now, they're trying to boost that, but it takes a different engine to consume a higher ethanol percentage in the fuel. How many of us have them? And if we did, where would we find the higher ethanol fuel? That's not readily available yet. So here we are, driving up the prices of basic food in countries around us and in our own country, with a demand that doesn't yet exist for a product we can't yet fully use in an attempt to get us off the oil that we will continue to demand anyway. In what world does this make sense?
4 comments:
This is what happens when government places its demands on a free market system. Those with an investment, a desire to remain profitable are forced to either react or drop out. In the case of corn, the futures market has determined that corn is a hot item and the price, real or not, will push upwards until reality is found.
An eye-opening post, Stan. Thanks.
Thank for further incentive to grow more of my own produce, including corn. It may not decrease my gas price, but it sure drops that grocery bill!!
Maybe growing our own is our only salvation (when it comes to food prices). I'm just trying to figure out where I'm going to keep the pigs and cows.
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