Red Headlines For April 22, 2008

Coming soon: $4 a gallon gas

Planning on visiting friends in Washington, D.C., David Kung of Seaford faced a big decision: Drive or take the train?

With gas prices skyrocketing, Kung, a 77-year-old retiree, took Amtrak to visit his friends last month. And, with prices hitting a new national and local high Monday, Kung said he will limit future trips as well. Especially, he said, because he believes — as do many experts — it won’t be long before prices top $4 a gallon for regular gas, at least in some places.

“No doubt about that,” Kung said, as he filled the tank on his Subaru Outback wagon yesterday at a Gulf station on Sunrise Highway in Seaford. The price there was $3.699 for a gallon of regular.

Long Islanders may not have to wait long to see $4 for regular: longislandgasprices.com, a Web site that depends on motorists’ reports, said at least one station, in Huntington, was posting a price for regular of $3.99 a gallon Monday, while 14 others were charging $3.89.

Prices have been rising all year, but Tuesday the average on Long Island was $3.695 a gallon for regular, according to the AAA — up 16 cents since Wednesday and yet another record. Just a month ago, a gallon of regular averaged $3.392 in Nassau and Suffolk. A year ago, it was $3.015 a gallon.

Premium gas averaged $4.037 a gallon on the Island Tuesday, AAA said and diesel fuel was $4.59 per gallon.

Emphasis added by me.

Price Volatility Adds to Worry on U.S. Farms

One measure of the farming industry’s frustration is the overflow crowd expected at a public forum on Tuesday at the Commodity Futures Trading Commission in Washington. Interest is so high that the commission, for the first time ever, will provide a Webcast of the forum, which it says is being held to gather information about whether crucial markets for hedging the price of crops “are properly performing their risk management and price discovery roles.” The Webcast link is available on the commission’s Web site, http://www.cftc.gov.

The additional costs that stem from volatility in grain prices — higher crop insurance premiums, for example — are not just a problem for farmers. “Eventually, those costs are going to come out of the pockets of the American consumer,” said William P. Jackson, general manager of AGRIServices, a grain-elevator complex on the Missouri River.

Prices of broad commodity indexes have climbed as much as 40 percent in the last year and grain prices have gained even more — about 65 percent for corn, 91 percent for soybeans and more than 100 percent for some types of wheat. This price boom has attracted a torrent of new investment from Wall Street, estimated to be as much as $300 billion.

Emphasis added by me.

And:

Many farmers and people in related businesses blame the tidal wave of investment pouring in from hedge funds, pension funds and index funds for the faulty futures contracts and rising volatility. But those institutional investors’ money actually adds liquidity to the market, which in theory should reduce price volatility, Mr. Lehman noted.

Greed devouring America — and the world!

And even worse:

Farmers used to leave the market-watching to traders who work for big grain elevator companies. But with some of those companies now refusing to buy crops in advance because hedging has become so expensive and uncertain, farmers have to follow and trade in those markets themselves.

“This is something the farmer didn’t have to worry about before,” said Curt Kimmel, a commodity broker at Bates Commodities, the advisory service Mr. Grieder uses. “It’s a cruel and unforgiving market.”

There’s a well-known phrase for this phenomenon: Every man for himself!

And the kill shot:

Robert E. Young II, chief economist for the American Farm Bureau Federation, has held meetings on this topic around the Farm Belt over the last month and has gotten an earful from distressed food producers and elevator owners, he said.

“I tell people, ‘You are not going to market the 2009 crop the way you marketed the 2007 crop. You may never market grain that way again.’ ”

Emphasis added by me.

And that means we will never again afford food like we used to.

Explore posts in the same categories: C.O.A.T. - Other, Depression 2.0, Other, Red Headlines

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