Energy Expense

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Hello everybody out there in farm country. This radio commentary is brought to you by the National Corn Growers Association, CropLife America, and Renewable Fuels Association. They are all friends, supporters, and allies of a healthy farm economy and prosperous rural America. Thank you.

And now for today’s commentary –

From Washington with John Block

Hard to believe that it is almost November. Our harvest on the farm is not quite wrapped up. I am starting to think about next year and the challenges we will face. We can not ignore the explosion in the cost of energy. Winter is coming. The pain of rising energy prices is already being felt. Electricity is up near 6%. Natural gas for home heating up 2% and headed higher. Look what has happened in Europe. Natural gas is six times as expensive as last year.

Electricity prices in the UK have jumped 700% from last year. European wind and power can not deliver the needed electricity because the wind didn’t blow and the sun didn’t shine. Now they are importing oil and gas and coal from wherever they can get it. That includes Russia. Our energy problems here in the U.S. don’t measure up to those in Europe, but they should not and will not be ignored. A cold winter could remind us.

The serious energy shortages are making the budgeting for next year’s farming much more difficult. Here is what we are looking at. Our fertilizer costs are skyrocketing. That’s because natural gas can account for 85% of the cost to make ammonia and urea. Fertilizer for our crops will cost as much as three times what we spent last year. Fertilizer is essential for growing, not just corn, but also wheat, oats, barley and more.

Prices keep rising because demand for fuel exceeds supply. Gas up your car at the gas station. That gets your attention. LP gas to dry our grain, diesel fuel for our trucks, tractors, combines – all of that will add to the farm budget expenses. Soybeans don’t require as much fertilizer as corn – therefore predictions are that some farms will switch from planting as much corn to more soybeans. World producers will still need corn to feed the livestock or meat prices will shoot up. There are still a lot of unanswered questions, but next year looks to be a big challenge for the farmers of the world. I think we can accept a gradual shift from fossil fuels, but we can’t move this fast. Excessive anti-carbon policies can fuel inflation and cost our economy.

Until next week, this John Block reporting from Washington, D.C. If you would like to review my radio shows going back more than 20 years, just go on-line to www.johnblockreports.com.