CNN Headline of the Day – Basic Supply and Demand
While running on the treadmill this morning, I was flipping through the channels as I couldn’t manage to run while watching Billy Madison. Morning TV is such crap, but I’m in Cincinatti and the roads are covered with ice so I’m treadmill bound.
I never stay on CNN or CNBC because watching news while running is possibly the most tedious thing I could imagine, but the CNN headline caught my eye. I can’t remember it exactly now, but the essence was “Ethanol Demand Up, Corn Supply Depleted.” I stopped and listened to the story which was a long and winding discussion where the main points were:
- Bush just said “we need alternative fuels (e.g ethanol)”
- Ethanol comes from corn
- Corn prices have risen from $1.80 / bushel to over $3 / bushel
- Corn prices are going to keep going up
- Oil prices are going to keep going down
- Ethanol will become more expensive and – as oil becomes less expensive – we’ll keep using it
- This will impact lots of other things – like the cost of beef – which are going to go up
Um – yeah – high school macroeconomics. I love the broad “the market will take care of this” discussion. Er, um, government subsidiaries anyone?