Why Milk Costs More Than Gas (The Nation)

[marmar]

Why Milk Costs More Than Gas
Nicholas von Hoffman



The other day milk was selling in a New England supermarket at $4.79 a gallon. Down the street, regular gasoline was going for about $3.04 a gallon.

One of the factors driving up the cost of milk is the ethanol stampede. Ethanol, as we all have been taught to believe by now, will bring us "energy independence" and lessen global warming with no change in the way we live--unless we happen to be a small child in a household with a limited budget.

Children from low-income families are either going to have to accustom themselves to drinking gasoline or learn to sing "No Milk Today."

American ethanol is made from corn, and the more corn we use to feed our cars, the more expensive is the corn left over for our livestock. Ergo, "No Milk Today."

If ethanol we must have, we could import it from Brazil, where they can make it cheaper from sugar cane than Americans can make it from corn. But Brazilian ethanol, thanks to the agribusiness lobby and a 54-cent-per-gallon import tariff, is kept out of the country.

Politicians of both parties, mad for winning elections in corn-growing Iowa, do not mention the cheaper Brazilian stuff. Their silence on lesser-cost alternative ethanol sources may help them please Midwestern agribusiness interests and just about nobody else.

But nobody else seems to know that, although it is not for lack of available information. The ethanol fraud has been exposed on mainstream TV on programs like ABC's 20/20. ......(more)

The complete piece is at: http://www.thenation.com/doc/20070730/vonhoffman

[drm604]

1. K&R

:kick:
People need to know about the ethanol scam.

[DangerDave921]

3. Mexico

And it drives up the price of tortillas in Mexico.

Is Supply and Demand such a difficult concept for politicians to understand? I swear. I may not be the brightest guy in the world, but there are some basic economic rules that a lot of people just don't get.

The law of unintended consequences is another big one that gets ignored a lot.

[AdHocSolver]

21. Politicians get Supply and Demand. It's the people who don't get it, which is why they get away...

with ripping us off. So that people can finally "get it", here in a nutshell is Supply and Demand simply and (I hope) painlessly explained.

Supply is defined as the quantity of goods and services available for sale at any given point in time. Demand refers to the amount of money available for purchasing the goods and services for sale at that point in time. It is assumed that sellers want to get rid of as much of their inventory as they can, and that buyers will try to purchase as much of the goods available as they can given the amount of money that they have available to spend.

If Supply is greater than Demand (or the same thing, Demand is less than Supply), then each Seller will lower his price to encourage buyers to purchase more of his product so that he won't be left with unsold inventory. In a competitive market situation, each seller will slowly lower his price so that the market price will drop.

If Supply is less than Demand (or the same thing, Demand is greater than supply), then Buyers will offer more money to the Sellers so that they get some of the goods, rather than go away empty handed. This drives up the market price.

So, how does this apply to the price of milk and the price of gas? Ethanol is made from corn. Milk comes from cows which are fed corn. In addition, many cereals are made from corn, dry pet food contains corn, soft drinks, cookies, cakes, and candies contain corn syrup. The increase in the Demand for corn-based ethanol by the super-profitable oil companies with lots of money to spend is driving up the price for all corn based on the mechanism described above.

How does the average American benefit from ethanol use in gasoline? You don't! It doesn't save gasoline since it reduces your car's miles-per-gallon, so that your car burns more gasoline. At the same time, you are going to be spending more, lots more, money on all the food you eat.

However, the oil companies and the agribusiness firms are going to make huge profits. And, since eating less food makes you healthier, your health insurance provider, if your lucky enough to have it, will save money and therefore make more profit.

Your politicians know this. They don't care about you. The oil companies and agribusiness firms send them big contributions. Politics is a market place. The wealthy players drive the cost up. The people have more votes. Yet they consistently reelect the same people who cater to the corporations who give them the most money. That is why there is no effective election reform. And, there won't be until a majority of the people wise up. I don't mean to spoil your day, but we need to get some reality out there.

The problem is all the noise out there from the pundits. To understand what is happening, don't listen to what they say, just look at what they do, and interpret it in light of the explanation I have provided here.

[AdHocSolver]

20. Ethanol was originally added to gas as a smog reducer to replace MBTE.

MBTE was used by some oil companies to reduce smog until it was discovered that it was a carcinogen and was polluting the water supply. So the switchover was made to ethanol. There was a problem though in that ethanol noticeably reduced gasoline mileage. I proved this to myself by buying gas alternatively from a MBTE gas station and an ethanol station. Using ethanol gas, I regularly got two to three miles less per gallon. I was careful to take into account the kind of driving that I did so that wouldn't be a factor.

While I was happy not to be polluting the water supply with MBTE, I could not understand how ethanol was less polluting when it caused ones car to burn more gas for driving the same number of miles (hence create more pollution).

Similarly, I don't see how replacing gasoline with ethanol is going to save gasoline or reduce global warming.

There is only ONE way to solve the problems of pollution, global climate change, and more expensive gasoline and that is to REDUCE CONSUMPTION. Switching to other fuels will never work. It costs money to make alternative fuels and it requires burning something to produce the energy to make the alternative fuel. The same goes for "hydrogen technology." Hydrogen fuel is a scam. Biofuels are a scam.

Increased gas mileage/reduced fuel consumption and similar conservation measures in homes and factories is the ONLY solution. Hybrid and electric vehicles are the way to go. The technology exists today. Hydrogen and biofuels keep us dependent on the oil ("fuel") companies and using corn for fuel drives the price up. All these suggested solutions mean more profit for the corporations, and higher cost and a reduced standard of living for the rest of us.

[madrchsod]

2. some of the cheapest namw brand milk in this area

can be found at gas stations.it`s great marketing idea, loose on milk and gasoline to sell over priced other stuff

[marmar]

5. There's just something wrong with a place.....

where you can buy gas, antifreeze, hot pizza, doughnuts and (supposedly) gourmet coffee at the same time. :) :scared:

[PBS Poll-435]

18. You Forgot

Polaroid Film. I mean Poland.

[Alpharetta]

4. Can USA grow more sugar?

I thought we had topped out on sugar production unless we are willing to damage more ecologically sensitive swamps and marshes. Am I misinformed?

[OlderButWiser]

6. We could in Michigan

we grow sugar beets by the truckload and that could easily be increased.

[jberryhill]

10. We don't need to

We have high sugar tariffs in order to protect the corn-based sweetener industry.

[dragonlady]

15. And high-fructose corn syrup is bad for you

It's in everything, but we pay attention to labels and stay away from it whenever we can. I'm old enough to remember when Coke was made with real sugar instead of cheap corn syrup, and it tasted a lot better. Recently I saw some Coke made in Mexico (with sugar) in the ethnic section at the grocery store. I was almost tempted to get a bottle and see if it tasted the way I remember from long ago.

[Bread and Circus]

7. Ethanol fuel is like going through your ass to get to your elbow.

First off, going to Brazil for "cheaper" ethanol defeats the purpose of energy Independence, which is Ethanol's only limited positive benefit. Secondly, ethanol is just a round about expensive way of storing solar energy and the only reason it is being promoted is because it stands to make some people rich and it seems to garner political support from Iowa. My concern regarding any biomass type fuel is that it would probably strip the land of nutrients driving higher needs for fertilizers, pesticides, and water. I wish we'd seek better ways to the energy directly from the sun.

Also, the reason why milk is so damn expensive has alot more to do with the "middle man" than the production of the milk itself. Farmer's get pennies on the dollar to produce (er, get their cow to produce :) ) and sell milk. I didn't read the article in entirety but I'd be surprised if the article doesn't talk about that.

[dragonlady]

14. Difference in milk costs

Milk has been increasing here too, but the smaller-scale grocery where we buy a lot of our food consistently has it for a dollar a gallon less than the huge grocery store chain (which has about 60 percent of the market, by the way). True, the smaller store is using it as a draw, but it probably isn't losing money on milk. So why does the big chain have to gouge consumers like that? (Oh, right, because they can.) We choose not to play their game.

[Bread and Circus]

17. I don't know about lately but last time I asked a dairy farmer, they got 19cents/gal for their milk

I think it's more now but still, most of the cost is the markup, not the production cost.

I think that's true for a lot of foods and that's partly why it's so goddam hard to be a farmer.

[fasttense]

8. So where is all this ethanol?

I don't see any ethanol fill-up stations. I can't buy it for my mower and Wal-Mart doesn't sell it because it doesn't come from China. Yet we are feeling the cost of it in our milk. So I ask if I have to pay more for my milk because dairy farmers have to pay more for their corn to feed their cows, where is all this ethanol?

[Fearless]

19. It's mixed into gasoline

Check the pump next time you fill up. It's written right on it.

[Apollo11]

9. Let's pay Brazil NOT to cut down their forests

I would not expect THE NATION to care that the Amazon rainforest is being destroyed by agribusiness interests to make way for beef and ethanol production.

It's obvious that the government should tax gasoline to discourage over-consumption and make vehicle manufacturers focus on delivering better mileage.

In England they are paying $7.50 for a gallon of gasoline.

My European Ford Fusion does 48 miles on one gallon of diesel.

America has a long way to catch up ...

PS - the above figures are based on American (not British) gallons.

One British gallon = 1.2 US gallons = 4.546 liters

[tridim]

11. A few months ago I predicted the price for raw corn would triple

Well last year it was 10 cents a cob, I saw it on "sale" yesterday for 50 cents a cob. Sorry, my prediction was off by just a bit. It's not even worth buying any more.

We simply cannot use our food supply for fuel. Let's start growing hemp instead.

[Summer93]

12. cost of drinks at gas stations

I stopped buying coffee at gas stations after I saw that two stations in my area found MBTA in their coffee. MBTA is a gasoline additive that combines with water. So when these stations made coffee with tap water at the station there was MBTA showing up in the coffee. It is a carcinogen. I wonder when the oil companies are to figure out how to separate MBTA from water.

[marmar]

13. Yikes!

:scared: I guess I won't complain about the $3 for soy lattes at Starbucks.

[Briar]

16. Boil this down to the basics

and look at the global situation. We live in a society that would rather turn food into petrol so it can run its cars than feed hungry people. We would just as soon see them starve!

And this makes us superior - how?