World Economics

I rarely write on this and related subjects, but the continuing rise in energy and food costs has, I believe, captured everyone's attention. Many of my neighbors are seriously engaged in selling their more fuel-inefficient vehicles; a number are getting measured for helmets and are checking out motorcycle and bicycle dealers.

When I think of gas and food in the same breath, my mind travels back to the winter of 1972. We'd just received a settlement from an auto accident and were finally able to purchase a good car. When my eyes fell on that red 1973 Pontiac Grand Am--one of the first off the line of that model--it was (since I was a male of that generation) love at first sight. With gas at 25 cents a gallon who cared that this car with its huge engine got 8 mpg city and, on a good day, 13 highway?

Only months later came the 1973 gas crisis and suddenly this grad student on partial scholarship and an assistantship was paying 400 percent more to feed this baby. In short order it became a "pleasure vehicle" and I adapted to the joys of urban transit. Even after the pump prices receeded to only 300 percent of their prior level, I had to keep my bus pass and use it daily.

But in 1973, just before gas prices skyrocketed, Texas panhandle wheat was going for upwards of $3 a bushel, which meant that a regular loaf of bread was running at about 30 cents. And West Texas crude oil was going for $3.55 a barrel.

Late in 2007 as headlines screamed that, due to numerous factors, wheat was soaring to "record" prices of just over $10 a bushel. Shortly after that the headlines began screaming that oil prices could rise precipitously, sending the prices of gas up and over the $4 per gallon mark. This week, in our area, we're almost there and crude oil is hitting $135 or more per barrel.

Obviously, I'm no economist, but I do possess some basic math skills. Adjusted for inflation and cost of living, a bushel of wheat, $3 in 1973, should be selling for $14 today and a barrel of that crude, then at $3.55, should now be at just over $16.

Yet, the price of wheat, even at "record" 2007 highs, has failed to keep even with inflation, while the price of oil is off the charts. So the farmers and the citizenry of the world in general are even deeper in the hole and the oil barons are riding even higher on their wave of prosperity.

What this means for interstate, much less, international trade, I'm not exactly sure. But I've said for years, since the first gas crisis in 1973, that the price of wheat should be tied to the price of oil as an international standard. Perhaps then, we could have some equity on both ends. So then we say to the oil producers, "Go ahead and set any price you want for your oil, but remember, you're also setting the same price you're going to pay for the wheat you buy." So that, however you cut it, the standard becomes, again as it was in 1973, a bushel of wheat for a barrel of crude. Seems fair to me.

We now return you to the usual daily insanity.