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InsiderOnline Blog: August 2013

The Federal Government Hides the Costs of Its Energy Policies

The “core consumer price index” no longer includes food and energy. Even so, you may have noticed your paycheck does not go as far at the grocery store. Scott Lincicome:

According to the St. Louis Fed, food inflation was 22% between January 2006 and June 2013, while core CPI clocked in at only 15% over the same period. This divergence grew following the recession, with food prices (9%) far outpacing core CPI (5.9%) since late 2009.

Certain family staples fared even worse: over the past five years, for example, the average price of meat, poultry, fish and eggs is 16.2% higher.

Food inflation’s impact on American families is real and significant. One industry consulting firm recently estimated that between 2006 and 2012 the typical family of four paid $2,055 more per year in food bills than it would have if these costs hadn’t suddenly started trending up. […]

Policies that divert corn into your gas tank—like the Rewable Fuels Standard and ethanol subsidies—are at least partly responsible:

[T]he Congressional Budget Office concluded in 2009 that U.S. ethanol policy was responsible for up to 15% of the total increase in domestic food prices, and benefited a small cabal of farmers and biofuel producers at the expense of American families and the economy more broadly. [Cato Institute, August 12]

Those policies cost taxpayers money and they don’t even give us better gas, writes Nick Loris:

Ethanol has lower energy content than gasoline, and although fuel that is 85 percent ethanol has a lower price at the pump, when adjusting for its lower British Thermal Units, it is actually more expensive. Taxpayers have also shelled out $45 billion over a 30-year time frame for ethanol, and while the targeted tax credit for ethanol expired, subsidies remain in place for other biofuels. [The Heritage Foundation, August 13]

Posted on 08/16/13 04:27 PM by Alex Adrianson

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