Of Food and Fuel

Statement

Of Food and Fuel

Americans currently face numerous economic challenges. Families across our nation must deal with ever increasing prices on necessities - health care, energy, and durable goods. But the rising cost of food is one of the most serious burdens affecting all segments of our population.

Consumers worldwide face increasing food prices. In the U.S., food prices rose four percent last year and are expected to climb as much again this year, according to the U.S. Department of Agriculture.

Right now, there are those lining up to place the blame for these price increases on one factor or another, boiling a complex situation down to a quote which can fit onto a bumper sticker.

Many would lay the increasing costs of food directly on the feet of the ethanol industry or commodity payments for wealthy southern farmers. Others point to global climate change. Still others place the blame on our driving habits, traveling longer distances with an ever increasing number of drivers.

In reality, the causes for the rising cost of food cannot be summed up in one sentence. A "perfect storm" of many factors and worldwide conditions have created the environment resulting in serious increases of food prices.

Expansion of international middle classes has lead to a rising demand for meat and dairy products in rapidly developing countries such as China and India. A rise in petroleum prices - due to speculative global markets, terrorism, and tight refining capacity - has increased the cost of everything from fertilizers to transportation to food processing.

Adding to the situation, weather conditions such as a drought in Australia and flooding in Argentina have affected the supply of wheat and dairy products. European Union countries have leveled embargoes on food exports - causing the worldwide shortage.

To be sure, the weak U.S. dollar and the pressure for countries to switch to biofuels has had a significant impact on the cost of corn, sugar, and soybeans. However, the impact is sometimes grossly overestimated.

For example, a $1-per-gallon increase in the price of gasoline has three times the impact on food prices as does a $1-per-bushel increase in the price of corn. According to the USDA, actual food inputs account for only about 19 cents of every dollar of processed food. The remaining 81 cents is wrapped up in processing, packaging, transportation, marketing, and other costs.

Our lack of a comprehensive energy policy is putting pressure on our pocketbooks at the gas station and the grocery store. Truckers are suffering record-high diesel costs and small freight companies find their future threatened, a serious situation which could lead to even higher food prices.

We must focus on creating a diverse, balanced energy policy concentrating on research and development. Only by having an energy portfolio which reaches across multiple areas will we see costs of food and fuel stabilize and return to manageable levels.

America is a country of innovation and invention. We should not surrender those ideals when it comes to our energy policy. We need to live up to our reputation by exploring every legitimate alternative energy source - including domestic resources. Wind, coal, solar, nuclear, biofuels, hydro, and petroleum should all be explored as part of a diverse, responsible energy portfolio.

The soaring costs for food and fuel are not going to magically come down. We need to honestly explore the regulatory and legislative impediments which exist, limiting our energy independence. Only by making a serious, focused investment to diversify our energy portfolio can we insulate ourselves from future burdens at the pump and pantry.

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