How The Government Hurts NH Economy
The article focuses on NH pizza parlors but if you look at the true underlying costs you'll see why even the pizza specific costs continue to go up as well and they all tie back to one thing... government causing it.
The two key areas the article touched on is 1) the cost of corn continues to rise causing many wheat farmers to switch their crops, this in turn causes the cost of wheat and other crops to rise. And 2) the cost of minimum wage is climbing to $7.25 an hour.
A couple additional costs they leave off which I think play just as much into the inflation are 3) taxes continue to climb and with record increases in our state budget I see this as only getting worse and 4) oil costs continue to rise.
Points 1 and 4 really do go hand in hand. After all why do corn costs continue to rise? With rising oils costs people look to alternatives for fuel. One option more and more people continue to turn to is corn. Shelled corn can be burned to help heat homes andEthanol markets continue to help drive up corn costs. High wheat costs caused by the farmers switching from wheat to corn to cash in on the hot market not only impact the products that use the wheat directly such as bread or pizza dough but it also effects other products like milk and cheese since wheat is used to feed the cows. All our energy efficiency programs pushing farmers to grow corn subsidized with our tax dollars don't take things like this into account.
Rising oil costs should be examined closer as well. What I find very interesting here is that in 2006 Democrats ran saying they would put an end to rising oil costs and stop the government's partnership with big oil. They claimed then, and we continue to hear Hillary and Obama claim now that their energy plans would be the solutions to all our problems, so let's look at a history of oil costs and see what is really happening here. They've had
Until 2003, oil prices stayed in the $20 per barrel range. It did jump in the late 1970s to nearly $40 due to the Iran/Iraq war but for the most part oil prices were stable in the low $20 range. In 2003 we saw prices jump to an average of $27.69 a barrel. 2004 they jumped again to $37.41 and by 2005 we saw prices average just around $50 a barrel. By 2006 though prices had stabilized again in the $50 range and by the end of 2005 we actually saw prices starting to fall.
July 2006 they hit their peek at $66.28
August 2006 - $64.93
September 2006 - $55.73
October 2006 - $50.98
November 2006 - $50.98
December 2006 - $54.30
January 2007 - $46.53
Around Feb 2007 Democrats took over both the house and senate so their energy policies began being put in place.
Feb 2007 - $51.36
Until June 2007 prices stayed around low to mid $50 range. Then hit $59.25
July 2007 - $65.96
Aug 2007 - $64.23
Sept 2007 - $70.94
Oct 2007 - $77.56
Nov 2007 - $86.92
Dec 2007 - $83.46
Jan 2008 - $84.70
2007 marked the single highest increase we've seen in oil prices in a single year with a near $20 per barrel jump.
Add to that higher costs due to increase minimum wage and higher costs due to taxes caused by uncontrolled spending as we are currently seeing here in NH, is anyone really surprised by the inflation we're seeing here?
Richard Barnes
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Reader Comments (5)
Your analysis tracks the price of oil relative to the value of the U.S. dollar. Track the price of oil relative to gold and I think you'll find the black stuff hasn't really gotten more expensive.
Our currency has been steadily and systematically devalued by decades of bad policy. And yes, this affects everything we do in a huge way -- too bad so few people understand it.
Matt
That's a very good point so I did a little homework to compare US dollars to oil to gold.
Gold was worth high $30 range to low $40 per ounce until around 1980.
Then the price of gold hit $641.20.
By 1990 it dropped to $423.80
Based on this data so far there is no correlation since oil remained at around $20 a barrel until around 2003. Meanwhile gold has jumped well over 100% from $40 an ounce to over $400.
2000 it was $272.15.
By 2005 gold was back up to $513 and now in 2008 it has reached $1,002.
http://en.wikipedia.org/wiki/Gold_as_an_investment
I am looking for a month to month break down of the price to closer compared to the numbers I posted above.
Right now we're in such a frenzy to replace oil that we aren't looking at the big picture.
Look at the domino effect I pointed out here...
Oil is too expensive.
Government steps in to "help" and push for fuel alternatives funded with taxes democrats put on oil
This causes oil to be even MORE expensive
the alternative fuel funding makes it quite profitable to grow corn since government funds now help create a higher then normal demand for the product.
Farmers seeing a profit to be made on corn switch from other crops to corn. (wheat being one that is less profitable)
With less of a supply of wheat, wheat now because more expensive.
Farms that use wheat to feed cows and other animals now pay more making it more expensive to raise cows and animals.
With higher costs associated with raising cows, the cost of their milk goes up.
This raises costs on other products such as cheese which uses the milk.
This raises costs on pizza and other products which are made from the milk, cheese and wheat.
This raises the over all cost of living and begins to harm 3rd world nations that rely on our supply of corn and wheat for their food.
Government says cost of living is too high and raises the minimum wage, which in turn makes it more expensive to product products and the cycle starts again.
Too often we don't look past the noses on our faces when looking for solutions to problems. We look at the here and now but don't look to see if our "solutions" are in fact creating bigger problems down the road.