Pop Quiz:

Who recently said this?

“I don’t think any consumer ought to be complaining about the price of (it) when they’re willing to pay $4 for a gallon of water.”

Was it:
a) Oil Company Executive
b) American Farmer
c) US Senator

(…Humming the theme to Final Jeopardy….)

If you answered “a”,

WRONG! (oil executives are far too wily to say something like that…)

If you answered “b”,

WRONG!

If you answered “c”,

WRONG!

If you answered “both b and c”

CORRECT!

The unabridged quote is “I don’t think any consumer ought to be complaining about the price of bread when they’re willing to pay $4 for a gallon of water”, and it was said by US Senator and Iowa farmer Charles Grassley. He made the comment to MSNBC’s Tom Curry, presumably in response to some question about the rising costs of food.

Meanwhile, his colleagues in the House have been publically venting their collective spleen at the executives of the top 5 domestic oil companies during Congressional hearings the last couple of days. Despite acknowledging that there is little that lawmakers can do to bring down the price of gasoline, they want to make a public showing of their support (pander) for the little people who are suffering from a more than 25% increase in the price of gasoline over the last year.

Here’s what they’re investigating…the price of gasoline looks like this over the last couple of years:

Not very good from a consumer standpoint…but, for fun, let’s look at the price of wheat over the same period:

No wonder Farmer-Senator Grassley is feeling a little heat.

Yeah, it’s a good time to be a wheat farmer, with prices going through the roof as more land is being converted to corn in order to meet the market demand for ethanol - a fuel and a business that is booming, although a business that would be commercially unviable if not for billions of dollars in federal subsidies.

One of the things that seems to be irritating the congressmen at the beatings..err..hearings is the fact that the oil companies are unwilling to turn down tax breaks provided them by the most recent energy bill, tax breaks that are intended to promote oil and gas exploration in high risk areas and construction of refineries. According to the Associated Press, these subsidies could total about $18 Billion over the next ten years, or about $1.8 Billion per year.

What we are not seeing are congressional hearings about the direct payments (subsidies) being made to farmers growing the high priced wheat. According to the Environmental Watch Group, over the last 5 years, direct payments made to farmers averaged about $5.1 Billion per year. Historically about 93% of that money has gone to the growers of 5 crops - wheat, corn, soybeans, cotton and rice. Keep in mind, times have changed from the days of mom and pop farms…most of these subsidies are being paid to the huge corporate farms, owned by stockholders and run by executives pretty much like the “fat cats” that run the oil companies.

This is giving me a headache, so I’ll summarize the current state of affairs…

1) The federal government is paying billions of dollars to help make ethanol commercially viable, which in turn is driving up the cost of food grains, which has increased farm net incomes by almost 50% over the last year.
2) Meanwhile the government is paying additional billions of dollars directly to farmers despite their current windfall brought about by the prices driven sky high by government meddling in the free markets.
3) The government is beating oil companies for a) wanting to keep relatively small (in comparison to the farm subsidies) tax breaks that will have value only if they invest in new refineries or explore for oil and gas in high risk areas and b) high gasoline prices brought about by global demand for crude oil - a situation that virtually everyone acknowledges cannot be affected by the oil companies themselves - they just happen to be in the right business at the right time.

and finally…

4) We have this advice to “fancy” waterdrinkers from one of our farmer lawmakers, “Shut-up!”

Let’s just do this…do away with all these subsidies and let the free market work. Take some portion of the dollars saved and pay for basic research into developing alternative energies or improving those currently available.

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