Consumers may gripe and moan as they top off their SUVs these days, but there's little, if any, evidence that sky-high prices are causing any reduction in driving.
Going into summer, analysts are predicting that gas prices will shoot even higher, maybe hitting $3 per gallon But, we suck it up… and pay more and more.
Farmers are getting a double whammy — higher costs for diesel to operate their equipment, and significantly more costly fertilizer because the price of natural gas for ammonia production rises in tandem with fuel prices.
During the 2000 planting season, according to recent Senate testimony by U.S. Farm Bureau Federation President Bob Drake, the cost of ammonia fertilizer was about $100 per ton. In the 2003 season, it had more than tripled to $350-plus. “The price volatility of natural gas threatens the existence of what little is left of the U.S. fertilizer industry,” he says, “and will further increase America's dependence on foreign sources of energy and fertilizer.”
Farmers using natural gas to power irrigation pumps saw costs skyrocket 70 percent last year. Diesel price increases have been 40 percent above historical averages. USDA estimates American farmers paid an extra $2.6 billion to produce 2003 food and fiber crops, compared to 2002.
Farm Bureau senior economist Terry Francl says supermarket food prices, based on a “market basket” of 16 basic grocery items, were up nearly 10.5 percent for first quarter 2004, compared to the same period in 2003. A substantial portion of the increase can be attributed to the general upward trend in energy prices, which affect not only production but food processing and distribution.
Congress and the administration continue to go through the motions of passing a comprehensive national energy policy aimed at creating “a diversified energy portfolio” that would seek to increase supplies of traditional energy as well as renewable energy, such as ethanol, biodiesel, and wind/solar.
Realistically, though, this country will for years to come continue to be dependent on traditional fuels for the bulk of its energy needs, funneling untold billions into the coffers of OPEC and Big Oil (including the natural gas industry).
Presidential candidates Bush and Kerry publicly bash each other over failure to curb rising prices, both knowing full well they're powerless to do anything. The OPEC sheiks control the spigots, and they've made it clear they're going to keep prices high (real gratitude on the part of the Saudis, who this nation has spent billions protecting).
Had there been a dedicated commitment years ago, on the order of our putting a man on the moon, we might now be far less concerned about the vagaries of Mideast oil. Instead, the three decades that have elapsed since the trauma of the '70s Arab oil embargo have been squandered by the United States in terms of any meaningful effort to lessen our dependence on imported energy. How many interim administrations and Congresses have fiddled while the imported energy noose tightened?
Will the new energy legislation now aborning finally start to reverse that trend? I wouldn't bet on it….