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I really should not read letters to the editor – they confirm my belief that the majority of people are as ignorant as I am. Here is my latest response to a letter to the Danville Advocate Messenger.

To Mona, Jeremy and the Fairgoers:

Why must there be a scapegoat any time a price increases or is deemed too high for your tastes? The prices that prevail in the marketplace are not “set” by any one person or firm (sans government obstruction). Despite what many of you believe, evil corporations do not set prices to exploit us bitty little consumers. Are the people responsible for putting on the fair somehow greedier this year than they were last year? If you subscribe to the view that market transactions are exploitive, then for consistency’s sake you must believe that you are exploiting sellers when prices are low. Somehow I don’t think you believe that.

What exactly then is a “fair” price? Oil companies are not exploiting us. If you believe oil companies are taking advantage of markets during wartime, then you are free in this country to go and secure oil and sell it to all of us at more reasonable prices. When you end up selling it for $75 per barrel, don’t dare mention supply and demand to us.

In Mr. Good’s letter of Thursday, July 20th, he makes two claims that unfortunately are not given much thought by people.

First, he claims that “the price of oil is affecting the cost of everything in this country.”

Really?

Oil prices have increased 32% during the first six months of 2006. Consumer prices have risen by nearly 4%. If all of the increase in consumer prices over the past 6 months had been due to oil price increases alone, then something that cost $10 in January would cost $10.40 today – hardly dramatic. Furthermore, due to the extensive division of labor and relatively free ability to trade goods and services across state and national boundaries, the impact of higher oil prices on the overall price level is far smaller today than at any other point in the petroleum era.

Second, he mentions that the price of milk has gone up. But let’s not be so quick to blame high oil prices for this either. American farmers are “milking” all of us.

The following is excerpted from Wednesday’s Washington Post:

“When a drought left pastures in a handful of Plains states parched in 2003, ranchers turned to the federal government for help. Officials at the U.S. Department of Agriculture quickly responded with what they considered an innovative plan. They decided to dip into massive stockpiles of powdered milk that the agency had stored in warehouses nationwide as part of its milk price-support program. Livestock owners could get the protein-rich commodity free and feed it to their cattle and calves. The milk would help ranchers weather the drought while the government reduced its growing stockpile. But within months, the program spawned a lucrative secondary market in which ranchers, feed dealers and brokers began trading the powdered milk in a daisy chain of transactions, generating millions of dollars in profits. . . . Taxpayers paid at least $400 million for the emergency milk program, one of an array of costly relief plans crafted by Congress and the USDA to insulate farmers and ranchers from risk.”

When will we wake up to the insanity of American agricultural policies? For example, right here in the 6th congressional district of KY Edwin Riley of Salvisa , KY received $10,000 in dairy subsidies in 2004 and over $100,000 in government subsidies between 1995 and 2004. The 6th district received nearly $200,000 in dairy subsidies in 2004 (see this site for farm subsidy data – http://www.ewg.org/farm/). Your milk prices are still high, yet you look to blame the oil companies. Shame on us all.

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