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President Joe Biden is still blaming inflation on COVID and Vladimir Putin. What he is not mentioning is how Democrats poured “kerosene on the accelerating economic recovery last March with their $1.9 trillion spending bill,” offers the WSJ.
Inflation was already at 7.9% when Mr. Putin invaded Ukraine. At the same time, their policies are hampering the supply side of the economy in myriad and interconnecting ways.
Energy and Food
The Administration’s war on oil and gas created enormous regulatory uncertainty that is stanching investment in new production despite high energy prices. Producers can’t find workers. Many left the industry when prices nose-dived early in the pandemic and are reluctant to return because Democrats have promised to put drillers out of business.
The Blockade on Pipelines
Democrats are limiting natural gas production in the Northeast’s rich shale deposits.
Progressives blame rising gas prices on natural gas exports, but the larger culprit is increasing demand in the U.S.
Hefty subsidies for wind and solar forced coal and nuclear plants to close down, but renewable power needs to be backed up by more gas.
Electricity up 11.1% in Last Year
If, as Joe Biden maintains, more green energy will reduce electricity prices, why have power prices increased by 11.1% in the last year?
More green energy will make the grid less reliable and increase demand for gas along with diesel-powered emergency generators, as it has in California and Texas.
Diesel Fuel Up to $2.40
Amid increased demand from freight and reduced refining capacity, diesel fuel is a buck more than gasoline prices, reports the WSJ.
Higher diesel prices filter through to food prices as ships, trains, trucks, tractors and other farm equipment rely on the fuel. To get a sobering look at what is going on at ground level, watch the interview with Dick Young’s Favorite Florida Farmer.
Biofuel mandates and subsidies have spurred refineries to shut down or shift to producing smaller amounts of “renewable” diesel from cooking oils. This is also a large reason soybean oil prices have more than doubled from pre-pandemic levels and why the American Bakers Association has urged the Administration to ease renewable fuel mandates.
Ethanol mandates are driving up the cost of feedstock, according to poultry producers.
At the same time, surging corn and soy prices are discouraging farmers from planting wheat to compensate for lost exports from Ukraine.
Yet the Administration wants to increase renewable fuel mandates and subsidies.
How to Rectify the Problem
More investment is needed to boost the supply side of the economy, which will increase worker productivity, real wages, and living standards. Mr. Biden’s plan to hammer businesses and investors with increased taxes and regulation will do the opposite.
Who to Thank?
In a recent speech, Mr. Biden again lobbied for Medicare to negotiate drug prices—i.e., price caps—”but this will create more pharmaceutical market distortions and suppress investment in innovation,” according to the WSJ.
By the way, prescription drug prices have risen a mere 2.2% in the last year. Thank competition for that, not government.
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