Why are food and gas prices so High?

Why are food and gas prices so high? If we elect Donald Trump, will he fix the issue? In a word, NO. No President has a magic wand, and no change of administration is suddenly going to make things the way they used to be!

No President can control things such as droughts, floods, hurricanes, tornadoes, wildfires, fruit and vegetable blights, invasive insects that attack crops, unseasonable cold snaps or withering heat waves.

Think about this for a moment: We’ve seen the devastation that tornadoes in the Midwest have left in their wake. What do you think happened to crops and livestock, not to mention refineries and fuel stations during those same events? Equally devastated!

Eggs: There are three factors at play here. First, there was a bout of bird flu, which took out over 55 million chickens (and the eggs they would have laid). Second, the cost of feed is up. Third, demand during Easter led to a temporary rise. The hurricane season slowed transport in the east, and the cost of transport has risen due to the cost of gasoline/diesel.

Milk:That same bird flu has transferred itself to cows and, while not deadly for them, has infected one out of every five cows. The infected cows must be taken out of the production line and the milk destroyed, until they clear the virus. The costs of feed, labor, fuel, and fertilizer (for the growing of feed) are higher. Some dairies have lowered the number of cows to be able to afford the higher cost of feed and transport.

https://www.fb.org/focus-on-agriculture/dairy-farmers-struggle-as-milk-prices-fall-and-costs-climb

Meat:Droughts and floods, high temperatures, and range fires have meant fewer cattle. In addition, some farmers have cut back their herds due to the high cost of feed, drought conditions, and rising costs of raising and maintaining herds. On the Texas Panhandle, fires burned more than a million acres of range land, affecting 85% of Texas’ cattle. The fires ran as fast as three acres per second, which is far faster than cattle can run. Many died, and many more had to be put down due to burn injuries. The fire broke out during calving season. Also, injured or sick cattle cannot be put into the food chain. Add that to the cost of transport. Prices went up.

~https://www.texastribune.org/2024/03/15/texas-wildfires-ranch-cattle-rebuilding/~

Wheat,Corn and Soybean:Those and other grain crops cost more. There are several reasons for this. The price of growing and shipping is higher. The pandemic caused the supply chain to slow, while demand remained high. Beyond that, there were droughts, floods, hurricanes and tornadoes in growing regions throughout the world, causing yields to be smaller. Trade restrictions, and the War in Ukraine (the “bread basket” of Europe) caused further shortages. Here in the US, we’ve had disastrous tornadoes, floods, and droughts, all of which affect the size of harvests, and the corresponding rise in consumer costs.

This also affects the prices of bread, baked goods, cereal and snacks.

~https://www.bls.gov/opub/btn/volume-12/high-grain-prices-rippled-throughout-the-economy.htm~

Fresh Fruits and Vegetables:Fruits and vegetables are also prone to diseases like citrus greening disease and other fungal and bacteriological diseases, invasive insects, as well as droughts, floods, freezes and other weather conditions. These reduce the volume of fruits and vegetables, despite demand that is constant for some and seasonal for others.

~https://extension.psu.edu/2024-disease-update-conditions-continue-to-favor-fungal-and-bacterial-tree-fruit-diseases~

~https://extension.psu.edu/forage-and-food-crops/fruit/pests-and-diseases~

Gas Prices:

Again, there are multiple factors at play here.

First of all, there is a season for gas. The winter fuel mix, designed for colder weather, is less expensive, and there is less demand for it. The summer blend is more expensive to produce, and is adjusted for the travel season. Supply and demand is also a factor. More people drive in the summer than in the winter, so the price is higher during the summer months, on top of the cost of manufacture.

The extreme cold in the winter conditions of January knocked some refineries offline. That limited supply. We also import some refined oil here in the US.

Another factor is the price set by the Oil Cartel, if/when we buy internationally, which we do for some types of refined oil products.

Member countries include Algeria. Congo. Equatorial Guinea. Gabon. Iran. Iraq. Kuwait. Libya. Nigeria. Saudi Arabia. United Arab Emirates. Venezuela, with Saudi Arabia the largest producer. The international price of oil from member countries is set by the Oil Cartel. They regulate how much oil the Arab nations produce, to keep the price stable and above the cost of production. This can affect the price of oil.

Second, there are three wars going on, which also affect the production, transportation, and processing of oil. They are the war in Ukraine, for which there is an embargo on Russian oil and a cessation of Ukrainian oil, lowering supply. There is war in the Middle east between Israel and Gaza, which affects transport of oil and fuel in that area, as well as the war waged by the Houthi militia around the Strait of Hormuz, which affects, not only the cost of oil, but any and all goods transported through the Suez Canal.

If the US produces more oil, the other oil producing countries produce less to make the price stay at a profitable level. The other factor is supply and demand. More demand in the US means higher prices.

(As a Historical Reference: In October of 1973 through January of 1974, President Nixon gave monetary support to Israel in the Yom Kipper War. The Oil Cartel set an embargo on any oil sales to the US, causing higher prices. We had 10% inflation at the time. Devaluation of the dollar in the early 1970’s also was a factor. Since that time, we have become much less reliant on foreign oil.)

~https://www.federalreservehistory.org/essays/oil-shock-of-1973-74~

If we move to non-gas vehicles, we will not be as reliant on gas, and the Oil Cartels will have less influence.

Those who drive gas powered cars should be overjoyed at the prospect of the addition of electric and hybrid vehicles, as they use less gas, which should mean lower prices for those driving gas vehicles due to lower demand. However, The American Fuel & Petrochemical Manufacturers have a misleading ad out right now denouncing the increase in production of electric vehicles.

“Don’t Ban Our Cars” ads have been running, extolling the populace to “stop President Biden’s policies aimed at banning most new gas cars. Urge them to do the right thing and vote to protect your consumer freedom.”

Gas powered cars are NOT being banned. They simply are going to be one of three options available to car buyers: gas powered, still the majority of cars until at least 2035, though hybrids, and electric vehicles will be more readily available in the future, and more refined in efficiency, as well as more charging stations.

No one is going around taking people’s existing vehicles, preventing owners from selling new or used gas powered cars, or keeping people from buying a used car that is gas powered. As far as “protecting consumer freedom,” the oil companies don’t want any competition, and are trying to reframe the issue into one of ‘taking away your freedom to choose” rather than lose any revenue to EV’s and hybrids.

If we cease making electric powered vehicles, our market for export will dry up, as the trend in Europe and other places is for electric vehicles. It makes good business sense to make products for export where there is a market for them.

~https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php#:~:text=Although%20U.S.%20annual%20total%20petroleum,and%20to%20supply%20international%20markets~.

~https://www.statista.com/topics/1830/opec/#topicOverview~