On the local radio station a couple of days ago, they told me that the price of a gallon of milk in New York has risen by 60 cents since January. It is now, they say, more than $3.50 a gallon, some 10% more than the $3.15-or-so-per-gallon price for auto fuel. The high price is, it seems, due to our desire to “wean ourselves from foreign oil.”
Whoa. Back up a moment. Say what?
What does foreign oil have to do with milk? OK, it's simple; here's how it works:
- We want to reduce our dependence on foreign oil. One way we can do that is to develop alternative energy sources.
- A major use of foreign oil is in auto fuel, so alternative auto fuels are good goals.
- And we've developed one: we mix ethanol with gasoline.
- We make ethanol from corn. Domestically. It doesn't come from foreign countries.
- Of course, because there's now a demand for corn to make ethanol the supply of corn for other uses is reduced, which drives up the price of corn.
- We use corn to feed dairy cattle.
- The cost of feeding a herd of dairy cattle goes up, therefore...
- ...the cost of producing milk goes up, and the farmers' other costs have not gone down. They have to make up the difference.
- The retail price of milk goes up.
It's too bad we can't pour auto fuel on our breakfast cereal, but I guess it's a good thing that our cars don't run on milk.