I’ve been amazed by the headlines this week forecasting that the food riots that have occurred in other parts of the world could be coming to our shores. Whoa is me stories of shortages and some left coast retailers placing limits on purchases of rice has been labeled by the lame brains in the lazy media as “rationing.”
Here’s the reality check; the so-called limits placed on rice purchases are four 20-pound bags per visit for individual customers. Now I know that rice is a dietary staple for a lot of people, but what family really plows through 80 pounds of rice in a week’s time? We might go through 20 pounds in a year’s time in our house!
Yes there are some shortages of rice around the world and like every other product, when the supply is down the price goes up. It’s called Economics 101, you know supply and demand. So reacting to the increasing prices, smart business people, like say restaurant owners started to buy up extra stock before the price jumped again. It’s only common sense that if you use a lot of a given product and you want to keep your prices down you stock up at the best possible price!
So with business people buying up the stock, the store shelves where temporarily thin and maybe Mom and Pop couldn’t pick up that hefty bag of rice, which had the media concluding that there was a horrendous shortage, rationing and riots!
If you ever wonder why you’re paying $3.59+ per gallon of gas, this is one of the reasons why. It’s the fear factor premium. There’s the possibility of a problem with oil workers somewhere in the world, a pipeline problem that could take a week to fix, but it COULD BE LONGER, and you get this gloom and doom prediction of shortages and dire circumstances and the commodities traders suddenly jack that fear into the price of oil futures. Often, the expected problem never happens, the pipeline is fixed in 24 hours and no shortage occurs, but we still take the hit at the pumps.
Some may find it hard to believe that it’s not President Bush and his oil buddies that drive the price of oil/gas, but the mysterious world of commodity trading. It might be interesting to take a look at the rice commodities and see what’s happening there.
Here’s the reality check; the so-called limits placed on rice purchases are four 20-pound bags per visit for individual customers. Now I know that rice is a dietary staple for a lot of people, but what family really plows through 80 pounds of rice in a week’s time? We might go through 20 pounds in a year’s time in our house!
Yes there are some shortages of rice around the world and like every other product, when the supply is down the price goes up. It’s called Economics 101, you know supply and demand. So reacting to the increasing prices, smart business people, like say restaurant owners started to buy up extra stock before the price jumped again. It’s only common sense that if you use a lot of a given product and you want to keep your prices down you stock up at the best possible price!
So with business people buying up the stock, the store shelves where temporarily thin and maybe Mom and Pop couldn’t pick up that hefty bag of rice, which had the media concluding that there was a horrendous shortage, rationing and riots!
If you ever wonder why you’re paying $3.59+ per gallon of gas, this is one of the reasons why. It’s the fear factor premium. There’s the possibility of a problem with oil workers somewhere in the world, a pipeline problem that could take a week to fix, but it COULD BE LONGER, and you get this gloom and doom prediction of shortages and dire circumstances and the commodities traders suddenly jack that fear into the price of oil futures. Often, the expected problem never happens, the pipeline is fixed in 24 hours and no shortage occurs, but we still take the hit at the pumps.
Some may find it hard to believe that it’s not President Bush and his oil buddies that drive the price of oil/gas, but the mysterious world of commodity trading. It might be interesting to take a look at the rice commodities and see what’s happening there.
4 comments:
By the time you posted, the price of gasoline has increased to $3.67 per gallon.
Thanks...I guess. Hence the + sign.
Crazy, I was out this morning and it was still $3.59.9.
I think that the stores aren't so much as rationing as they are trying to stop small scale speculators from buying the rice and then turning around and selling it in a little while for a good profit. After all, I heard a report that the price of rice has tripled since the beginning of the year. That is simply astounding.
Stan- Great point...we've seen people gouge others during a crisis, so why not during a contrived "cisis."
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