What is Causing High Prices for Gas and Food

Is there a shortage of crude oil? No, the oil supply has been increasing and has always increased. OPEC controls the supply. New oil discoveries have proven that the world oil supply is in little if any danger of drying up.

Has the demand for crude oil increased? Yes. China is buying more OPEC oil than ever before to support their massive growth. China is just one more country in the demand equation. Environmentalists, State and Federal Governments have prevented increasing gasoline production and domestic oil drilling. President Bush has proposed additional domestic drilling many times and each time Environmentalist and Liberals (along with a handful of Republicans In Name Only) have prevented domestic drilling. So with the increased global demand for crude oil and our own Government's restrictions on drilling for our own oil means that crude prices are going to keep rising.

Is there a shortage of gasoline production in America? Yes! We have not been allowed to build new refineries to produce gasoline thus as the demand for gasoline increases and the supply fails to increase prices will have to increase. We actually import refined gasoline from other countries. Tanker ships of refined gasoline actually travel the oceans to deliver gasoline to the United States.

Is the demand for gasoline increasing? Yes, but why it is increasing is two fold. Yes, Americans love our cars, SUV's and other gas powered toys. There is nothing wrong with this. However most people don't realize that 10% ethanol is actually causing an increased demand for gasoline. I have done the real life testing to prove that 10% ethanol reduces MPG so much that the average car actually burns more gasoline when running on 10% ethanol than if it was using straight gasoline. The inefficiency of 10% ethanol has caused an increase in demand which coupled with restricted supplies causes higher prices. This is on top of the fact that ethanol cost more to produce than ever before because ethanol has driven up the price of corn per bushel.

So what does all of this have to do with food prices? Some of the increased food prices are do to the increased costs to deliver food to market due to higher fuel costs. Remember that fuel costs are increasing in part due to ethanol usage. As the demand for corn for ethanol increases farmers are growing less of other essential grains. Crop prices for corn, soybeans, wheat and rye are at record highs and are pushing food prices even higher. On top of that ethanol now has to use $6/bushel corn causing ethanol to cost even more. This is causing a circular effect of increasing food and fuel prices. Each contributing to the others increase in cost.

The cause of all of this mayhem is environmental regulations for mandated ethanol. We the people of this Nation, need to realize that ethanol mandates are causing the problems.Ethanol mandates have done the following:

1. Demanded using more corn for fuel.
2. Farmers plant more corn and fewer other grains such as soybeans, wheat, rye etc.
3. Shortages in the other grains have caused those grain prices to skyrocket.
4. So much corn is being diverted to fuel that feed grain prices have skyrocketed.
5. Livestock farmers are paying through the nose to feed their herds.
6. All products using corn, wheat, soybeans and other grains are increasing in price.
7. Meat prices are increasing because of the increased cost of feed grains.
8. Due to the low efficiency of ethanol causing lower MPG actual gasoline usage has increased causing increased demand for gasoline production.
9. Government is limiting gasoline production so gas prices are increasing.
10. Gas prices going up are adding to the already increased prices for food.

Now the State and Federal Governments want to repeat step 1 and do it all over again. The high fuel, energy and food prices are all Government caused and can be solved be getting the Government out of the loop. End the ethanol mandates and two years from now all the prices will be lower.