Cost of Gas accounts for just 4.0% of personal consumption

As to be expected, the media is all over this disturbing trend in gas prices.Per usual, though, the line of reporting on this issue is sensational rather than rational.

At this time last year, the national average was $3.05 per gallon, up from an average of $2.91 per gallon at the same point in 2006 which, in turn, was up from an average of $2.24 at the same point in 2005.

The Energy Information Administration, a unit of the Department of Energy, reports that the national average for a gallon of gasoline as of May 5 is now $3.61. Presumably, that average will continue to go up as oil prices continue to increase.

A Scenario
We'll assume a vehicle is driven 15,000 miles per year and gets 20.3 miles per gallon, which is a rough estimate of the average fuel economy reported by the Environmental Protection Agency for model years 2003 to 2007 on light-duty vehicles.
For ease of comparison, we have taken the average annual price of gasoline reported by the Energy Information Administration for the years 2003 to 2007, and have computed an average price for 2008 through May 5.

Using these figures, we calculate the following:



The cost of gasoline is chewing up a larger portion of one's household income than it used to. It is an aggravating development, but ultimately, it isn't a death blow to consumers or the economy.

It may shock you to learn, too, that the cost of gasoline accounts for just 4.0% of personal consumption expenditures. That's not a typo. We're talking four percent, yet the media reports would have one think the cost is closer to forty percent. In effect, then, a 10% increase in gas prices reduces spending power by 0.4%.

Sensational stories sell more newspapers, of course, and get more viewers to tune in, particularly when the issue is one with which we can all relate.

The rising cost of gasoline gets everyone fired up so, naturally, in this election year some politicians are calling for a gas tax holiday. However, what we really need a break from are the half-baked reports on the impact of rising gas prices.

A rational approach when discussing gasoline costs would demand that there is an acknowledgment that high gas prices are dampening consumer spending. At the same time, it would reveal that high gas prices haven't damned the consumer to a monastic lifestyle.

Source

Agribusiness traders & Retailers are raking in huge profits from the Food Crisis

The world food crisis is hurting a lot of people, but global agribusiness firms, traders and speculators are raking in huge profits.

Much of the news coverage of the world food crisis has focused on riots in low-income countries, where workers and others cannot cope with skyrocketing costs of staple foods.

But there is another side to the story: the big profits that are being made by huge food corporations and investors.

1. Cargill, the world's biggest grain trader, achieved an 86% increase in profits from commodity trading in the first quarter of this year.

2. Bunge, another huge food trader, had a 77% increase in profits during the last quarter of last year.

3. ADM, the second largest grain trader in the world, registered a 67% per cent increase in profits in 2007.

4. Tesco, the UK supermarket retail giant, rose by a record 11.8% last year.

5. France's Carrefour and Wal-Mart of the US, say that food sales are the main sector sustaining their profit increases.

6. Investment funds, running away from sliding stock markets and the credit crunch, are having a heyday on the commodity markets, driving prices out of reach for food importers like Bangladesh and the Philippines.

Source

Secretary Condoleezza Rice Blames Growing Indian, Chinese Appetite For Global Food Crisis - A JOKE !!!

U.S. Secretary of State Condoleezza Rice's comment that the "growing Indian and Chinese appetite is contributing to the global food crisis" has kicked up a controversy.

In an interactive session at the Peace Corps 2008 Country Directors Conference, Rice said the "improvement in the diets of people in India and China", which is forcing the governments there to keep food "inside" is a cause for the current global supply shortage.

The top Bush administration official said the ongoing food crisis was mainly due to "four causes."

1. Food Production seems to be declining and declining to the point that people are actually putting export caps on the amount of food.

2. Improvement in the diets of people, for instance, in China and India, and then pressures to keep food inside the country.

3. The "incredible cost" that fuel prices, everything from fertilizer to transportation costs, was bringing on the ability to distribute or to get food to people, was identified as another factor by Rice.

4. The fourth factor was the one relating to "biofuels", which was "not a large part of the problem, but it may, in fact, be a part of the problem," she added.

Indian Govt Reacted Strongly -

Indian Government has said the U.S. Secretary of State has made a wrong assessment of the whole problem. Planning Commission Deputy Chairman, Montek Singh Alhuwalia said, "I don't agree that there is a global food crisis because of India and China. There is an increase in food production too in both the countries."

"The increase in production and use of biofuels might be the cause why cultivable area is limited," he added.

However, the Left parties came down heavily on Rice for her comments. One of the senior politburo members condemned her statement as "bad, indecent and cruel."

"The whole presumption is that the developing world is suddenly eating more than they were and suddenly they are not suffering from malnultrition as they were," said the member.

Source