Why insanity is the new normal

We’ve been hearing about the impending financial apocolypse for months now. When did ‘sub-prime’, ‘credit crunch’, and ‘recession’ become part of the collective lexicon?

When I got my license, gas was $0.98/gallon. It’s now nearly $4. Ouch! What gives? I’ve heard people griping that the government isn’t doing enough to develop biofules and alternative sources of energy as if that will save us from high oil prices. That the government needs to repeal the gas taxes. We need subsidies! Ok, no offense, but those people are idiots.

I offer to you, dear reader, a hypothesis for the rising cost of gas: most of the gas in this country is about 10% corn ethanol. CORN being the operative word. CORN people! Has anyone noticed that the price of corn has gone sky high? Might it be because there’s increased demand due to increased ethanol production? Corn (and grain and basically every other commodity crop) is sitll subsidized by the government and even with those subsidies, prices are going nuts. (I paid $2.39 for 6 eggs last night. Chickens are CORN FED!)

My point? Gas and food prices are linked now and insanity is the name of the game. Scarcity economics. Scarcity economics relies on the premise that people will pay whatever you ask them to if they think they won’t be able to get any tomorrow.  Other markets that rely on this theory?  College institutions, minerals and gems, and I think water could in 50 years.

In this day and age of mass consumption on a global level, it’s not surprising that we’re seeing an increase in markets ruled by scarcity economics. With all the doom and gloom talk we keep hearing (the planet is dying, you’re going to lose your house, you child will die from pesticide exposure), can you really fault anyone for thinking that they might be the only person left when the sun rises tomorrow? I’d stock up on everything if I bought into that logic.

-sigh-

Read here for more info about ethanol production (including molecular structure!):

Ethanol fuel

Read here for the inspiration for this post:

Why we’re stuck with insane prices

ETA: Eric brought up a good point and I guess I just assumed it was implied in this post but to clarify….gas and food prices have been artificially low for at least the last 50 years, if not more. Government subsidies kept prices low so now, prices are probably a more accurate reflection of the true cost. Prices are still artificially low!

Here’s my question then: if the government is STILL subsidising gas and agriculture…where’s all the profit going from the higher prices?

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~ by fluvial on April 29, 2008.

3 Responses to “Why insanity is the new normal”

  1. You would love Omnivore’s Dilemma by Michael Pollan. I’ll let you borrow my copy. He basically says that humanity made a deal with the devil when we starting fixing nitrogen synthetically into fertilizers. I think he was actually saying that we made too many people by growing too much corn, etc… scary….

    That and the fact that fuel and food prices are very connected for most people because we don’t eat our landscapes any more. We eat other people’s landscapes. Argh.

  2. I just heard this same story on the radio on my way home. The guy was like “why are prices so RIDICULOUSLY high?” He actually said “ridiculously”.

    I completely deny the premise! Prices are not ridiculously high for oil now. Prices have been ridiculously LOW and we thought that was sensible. That was artificial. Oil is a dangerous, flammable, massively impure substance which can only be obtained at great expense by pumping it from below the earth’s crust and then refining it in massive factories. Why on earth should it be cheaper than, say, milk, a substance which we squirt out of conveniently located cows?

    But gasoline HAS been until recently cheaper than milk. I’ve been saying for ten years that this made no sense and had to end sometime soon, and this is it.

  3. Agreed! I mean, I hate paying so much for gas just as much as anyone else but you’re right…prices have always been artificially low. So now they’ve gone up so high which proves my thesis: INSANITY IS THE NEW NORM!

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