U.S. Energy prices have risen to more than 6 percent of consumer spending—which may be a historic “tipping point.” Our food prices, meanwhile, have had their steepest increase in a generation, to about 6.5 percent of spending. That’s a double whammy consumers haven’t suffered since Jimmy Carter’s infamous “stagflation,” a painful mix of weak economic growth, high unemployment, and rising inflation in the late 1970’s.
Both the high oil prices and the high food prices trace directly back to the Obama Administration. Oil has gotten no scarcer during the Obama years, but the dollar has weakened by about 17 percent. The price of oil is denominated in U.S. dollars, so the dollar decline almost exactly matches the rise in America’s oil prices. Meanwhile, the President has engineered a stop-stall on domestic energy production, from Alaska to the Gulf, making even our own oil more costly.
Some months ago I sat at an energy roundtable with Congressman Markey of Massachusetts (of Waxman-Markey cap-and-trade fame), the President of Duke Power, and the former director of President Clinton’s Council on Environmental Quality. The sympathy at the table was for rigging higher natural gas prices so the huge federal subsidies for wind turbines and solar panels would seem less a drain on our economic growth.
Recently, moreover, the Congressional Research Service reported the U.S. has more fossil energy than any other nation when we total our coal, oil, natural gas, and our new shale gas and oil reserves. Far from having “just 2 percent of the world’s oil reserves” we have centuries worth of fossil fuels—which the Obama administration is committed to not using.
The food inflation too is now Obama’s. Under both Bush and Obama, the federal government has cheerfully diverted huge amounts of grain to auto fuel, creating an artificial food shortage. That’s triggered food price inflation for the poorest around the world. Corn ethanol may be “renewable,” but the subsidies make it very expensive to use.