Aug 13, 2007

You Think Cereal is Expensive Now?

The next time you go to the supermarket--or even better, your local warehouse place, Costco, Wal-Mart, Smart &Final, etc--and start shaking your head at the outrageous prices of cereal like I have been doing for nearly ten years now, think "Ethanol" as you plunk down the money. That's right, ethanol--you know, that miracle fuel that is supposed to help us get over our "addiction to oil" as George W. Bush puts it--well, it's all part of the same gaming that's going on in our Subsidized Capitalistic version of Socialism. Ethanol is 25% less efficient than gasoline; its pollution is more corrosive than gasoline; after the total expenditure of energy to make the ethanol, the net effect is actually negative efficiency; and the latest subsidies for corn-based ethanol are driving food costs higher and higher. People in Mexico are rioting and complaining that the price of tortillas has doubled. When I was a kid, corn flakes represented the cheapest food money could buy.

Well, it all hangs together, and if you want a good education about how it all works, take a look at the lead article at F.W. Engdahl's website, Geopolitics-Geoeconomics. The article is entitled "Buy Feed Corn: They're About to Stop Making it." (It is originally published in Financial Sense.) Engdahl is a former oil man who wrote a great book--long out of print but now available again--called A Century of War: Anglo-American Politics and the New World Order (1993), and if you want to get an education about the history of the oil business, read it. It takes ten minutes, but it's one of the best ten minutes of education you will get.

When you consider how farmers are rushing to get the subsidies for growing corn for ethanol and buying more petroleum-based fertilizer to grow it, causing more ground and water pollution, more dead spots out in the Gulf of Mexico below the Mississippi Delta; and down in Brazil they are clearing more forests for planting crops to produce bio-ethanol (thereby eliminating trees that consume carbon dioxide), you'll begin to wonder how we will ever get out of this terrible dependence on petroleum.

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