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This holiday season, concern here and across the country is growing over rising prices. The U.S. Department of Labor publishes inflation data monthly, and in the twelve months ending Oct. 31, overall consumer prices rose 6.2%, the largest annual increase in the past 30 years.
With a single composite number like 6.2%, the devil is in the details. Some rising costs are much more difficult for us to deal with, others can be avoided. Here are some government 12 month price increase data that affect all of us:
Gasoline 50%, Fuel Oil 59%, Natural gas 28% Used cars and trucks 26% New cars and trucks 10%
Food eaten at home: Beef 20%, Pork 14%, Meat, poultry, fish and eggs overall 12%
The Maine Public Utility Commission has reported that a large number of residents may see power supply costs up 60% to 80% for 2022.
We've heard the word "transitory" used a lot. In July our President stated: "While we're confident that (unchecked inflation) isn't what we're seeing today, we're going to remain vigilant about any response that is needed." Yet recent commentary from many corporate leaders indicate that material and labor costs are still rising alarmingly. "Transitory" may be fanciful thinking.
Now they appear to be changing their tune at the White House. A couple of weeks ago President Biden spoke in Scotland and blamed higher oil prices on OPEC. He has been publicly calling on foreign oil producers to pump more. Interestingly, his administration rode into Washington on a pledge to reduce the consumption of fossil fuels in favor of renewables. Following were policy changes, executive orders, tightened regulation, and pipeline closures, which all taken together tend to drive domestic output lower. In a recent Bloomberg interview his Energy Secretary laughed when asked for her plan to increase U S domestic oil production. His nominee for Comptroller of the Currency has stated "A lot of the smaller players in that (oil, gas and coal) industry are going to probably go bankrupt in short order, at least we want them to go bankrupt if we want to tackle climate change."
Now they have decided to release oil from our Strategic Petroleum Reserve, ostensibly stored there for serious national emergencies. This could well have some short term impact. But just two weeks ago the government's own Energy Information Administration, forecasted gasoline and heating oil prices to remain near current levels through the end of 2022; U S petroleum output is forecasted to be 7.8% lower next year than in 2019. Worldwide consumption is still rising. Rising demand coupled with reduced supply translates to higher fuel prices.
I wonder, rather than beseeching foreigners to produce more while trying to regulate our domestic energy producers out of business, how about asking them to produce more? That may have helped people in a cold winter struggling to pay such high prices.
The Biden Administration has also mentioned that coronavirus has contributed to shortages that fueled this inflation. But the solution? In the words of the N Y Times, " ...(Biden) says a key way to help relieve increasing prices is to pass a $1.85 trillion collection of spending programs and tax cuts that is currently languishing in the Senate”. $1.85 trillion is questionable. It could exceed $4 trillion over the 10-year term, according to a University of Pennsylvania study.
I understand this inflation has some unique underpinnings. I am not an economist and I am not attempting to explain it fully. But with the Federal Reserve having pushed a gusher of money into the economy while holding interest rates near zero, and with the federal government (according to USASpending.gov) already having authorized nearly $4 trillion for COVID relief over two years plus another $1.2 trillion for the infrastructure plan that just passed, maybe we should slow down and give some serious, critical thought to the possibility that so much money chasing too few goods and services drives prices up? With the prospect of pumping at least another $1.85 trillion+ into the economy nearing a vote, doesn't such consideration seem prudent?
Meanwhile many of our neighbors in NH and Maine will likely be finding things a lot more difficult financially in the coming months, coping with dramatically higher heat, fuel and food bills. So let's keep our eyes wide open and critical thinking top of mind. We ourselves do not cause inflation, and no matter how complex the causality may be, we certainly have a right to demand that our own government halt such massive spending and give more in depth attention to the real world effects of regulation. Inflation is a scourge that impacts all of us, especially people with lower incomes, and governmental actions contributing to that require objective, bipartisan consideration.
Ken McCord of New Castle is a retired small business founder and CEO with a keen interest in national and world affairs.
This article originally appeared on Portsmouth Herald: McCord: Rising prices will cause real hardship in Maine and NH