Exchanging Milk for Oil

Liberals in congress have levied another feel good mandate to produce more ethanol. Currently ethanol is manufactured from corn. This means that corn is being diverted from food production to ethanol production. Their excuse for doing so is the claim that it will increase America's energy independence.

USDA estimates state that 3.2 billion bushels of corn crop will be used to make ethanol this year. That is a 52% increase over the 2006 level. That means that there is less corn to feed to cows. The law of supply and demand then will kick in, meaning that due to the lower supply, the price will increase to satisfy the demand. Dairy farmer's are not going to simply smile and eat that price increase... They'll of course pass it right along to you and me!

It is estimated that the price of milk will increase by 40 cents per gallon and 60 cents per pound of cheese. These increases are not limited only to dairy either. Some sources say that we will see a 7% across-the-board increase in food prices.

With all of this, there is no proof that increasing ethanol production will decrease the price we pay at the pump. In fact, ethanol production tends to be more expensive than gasoline production. That is the other variable that goes into the projected food price increases; the increase in transportation costs.

The liberals of course do not debate the fact that the increased ethanol production will have a deleterious effect on our pocketbooks. They just use their common line, "everyone just needs to tighten their belts for the common good". Of course that's the same rationale they'll use when they hike your taxes through the roof. Why is it that people support these politicians that insist on reducing personal prosperity? Wouldn't it make more sense to run on a platform of increasing personal prosperity. I just don't understand liberal in the least.

Labels: ,

Weblog Commenting and Trackback by HaloScan.com