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  • Morning Bell: Government Is the Problem on Food and Energy Prices

    Food riots have forced the collapse of the government in Haiti. People are dying in food lines in Egypt. The U.N. warns that food stocks for 450,000 Cambodian children is set to tun out in 30 days. Rising hunger is contributing to instability in Afghanistan. In India, even the gods are going hungry. After more than 30 years of declining hunger, suddenly, this year soaring commodity prices are causing hunger worldwide. The poor are are suffering the most.

    Some are blaming the food crisis on droughts in Australia and growing demand for food in Asia. But this can’t be the first time inclement weather has affected food production over the last 30 years, and Asian demand has been growing for a generation as well. More and more people are realizing that well-intentioned government efforts to combat global warming are behind the cause of the “silent tsunami” of hunger. The Washington Post reports today:

    This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has helped farmers like Johnson, but it has boosted demand — and prices — for corn at the same time global grain demand is growing. … And it has linked food and fuel prices just as oil is rising to new records, pulling up the price of anything that can be poured into a gasoline tank.

    The link between government ethanol mandates for fuel and worldwide hunger has some scientists calling for a change in policy. The AP reports today:

    Some top international food scientists on Tuesday recommended halting the use of food-based biofuels, such as ethanol, saying it would cut corn prices by 20 percent during a world food crisis. The three senior scientists with an international research consortium pushing a biofuel moratorium said nations need to rethink programs that divert food such as corn and soybeans into fuel, given the burgeoning worldwide food crisis.

    These scientists are only half right. The answer to problems caused by government ethanol mandates is not government bans on ethanol. Instead we need to be looking to get government regulation, restrictions and subsidies out of the energy and food sectors. Washington Post columnist Robert Samuelson looks at politician pandering on gas prices and advises:

    The truth is that we’re almost powerless to influence today’s prices. We are because we didn’t take sensible actions 10 or 20 years ago. If we persist, we will be even worse off in a decade or two. The first thing to do: Start drilling.

    It may surprise Americans to discover that the United States is the third-largest oil producer, behind Saudi Arabia and Russia. We could be producing more, but Congress has put large areas of potential supply off-limits….

    Although production from restricted areas won’t make the United States self-sufficient, it might stabilize output or even reduce imports. No one knows exactly what’s in these areas, because the exploratory work is old. Estimates indicate that production from the Arctic National Wildlife Refuge might equal almost 5 percent of present U.S. oil use.

    If Congress is serious about both reducing energy costs and carbon emissions while not causing further economic pain both here at home and abroad, lawmakers should abandon all carbon cap-and-trade plans. As the ethanol mandate disaster shows, environmental regulations increase costs — and those costs are inevitability felt hardest by the poor.

    Like Samuelson suggests, we need to develop our own energy supplies if we are serious about lowering gas prices and reducing our dependence on foreign oil. Congress also needs to remove the barriers preventing new nuclear plants here in the United States. France already receives 75% of its electricity from nuclear energy and other European countries are also adopting this clean, safe and carbon friendly energy source.

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

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