Archive for the ‘commodity prices’ tag
The Elasticity of Gas Prices #
The reality of the price at the pump against the price of a barrel:
Analyses of gasoline economics show that when the price of oil rises, it takes up to four weeks for gas station prices to catch up, with most of the increase taking place within the first two weeks. But when oil prices sink, it takes up to eight weeks for the savings to be passed along to consumers. The phenomenon is known as “asymmetric price adjustment” (PDF) or, more informally, “rockets and feathers.”
The Farm Bill #
Sam Hurst’s long article for Gourmet about the farm bill is full of the needless exposition that I don’t usually like. The final point, however, is important.
While this year’s Farm Bill winds its way through the Conference Committee, grain processors, cattle feeders, and the ethanol industry still control the debate in Washington, and they all profit from overproduction. Prices are high today, but the more farmers expand production to meet the opportunity, the more prices will fall tomorrow. So raw-commodity prices stay low over the long term, and taxpayers pick up the tab to keep struggling farmers afloat from one harvest to the next. And President Bush’s veto threat still lurks if Harkin or other reformers try to add new money to the Farm Bill to pay for multifunctional reforms.
(via brijit)
A for shorter — and equally informative — explanation of the current farm bill is offered by The Economist.
The Consequences of High Rice Prices #
The Economist is — with some justification — rather pessimistic about the possible impact of sky-high commodity prices on Asian politics. The introduction:
THE soaring price of rice and dwindling stockpiles of Asia’s staple food are causing anxiety across the continent. In particular the Philippines, a big, hungry country which cannot grow enough to feed itself, could be in trouble. The front pages of Manila’s newspapers scream about a “rice crisis”, as politicians float drastic solutions, such as forcing the country’s top 100 companies to take up rice farming. Farmers in Thailand, the world’s largest rice exporter, are delighted with the price surge, although some were this week said to be hiring guards to protect their valuable crops against “rice bandits”.
And the bleak conclusion:
The region needs a new green revolution, especially if it wants to avoid revolutions of the blood-stained variety.