Sunday, February 17, 2008

Rising Prices at the Salt Lick

I was spending my late Sunday afternoon at the Salt Lick. For those that do not know, this one of the better bbq joints around. Well, its really the only bbq place I know of, so I don't have a frame of reference. I have been to the Salt Lick several times over the past four years and I usually order the family plate. Last year, the plate was $15. Today, I looked at the menu and they raised the price up to $18 dollars. A three dollar increase within a year. I was very much dissapointed, but luckily, I did not have to pay for it. One of my friends inquired about the rise in price and the waitress skeptically replied that they had to raise the price up because of the increase cost of corn. I have been hearing many stories about how with the increase demand of corn based ethanol, the price of corn has been increasing. Thus, increasing the price of life-stock and meat. I never realized how real this is until now. I am a little concerned about this since if the price of meat is rising because of corn, it will affect a lot of people. We all like our beef.
I decided to look more into this and I found this very interesting study. According to this study, the price of corn and oil have been independently fluctuating prior to 2007 but now are starting to show some close correlations. This is due to a large portion of the corn harvest being used to produce ethanol which is then mixed with gasoline. The study also stated that the 51 cent per gallon subsidy will become very costly for the American government, which then will become a tax burden for its citizens. The study concludes that there must be a change in this policy. It suggests that if the price of crude is above $70 a barrel, the subsidy should not be in effect. This is due to the fact that ethanol production would be profitable at prices above $70. The study also goes on analyzes four different policies. But it is interesting to note that if the price of oil is below $70 a barrel, the demand for ethanol would probably fall. Therefore a subsidy would be useful for corn based ethanol producers. I feel that these subsidies are in affect proliferating the rising cost of corn and food in general because more of the corn is being used for ethanol production. Now ethanol production is the second largest consumer of corn behind domestic animal feed. So back to my bbq. I got the bill, and it was a hefty sum, close to $300 dollars for 17 people. Thats a chunk of change. So I guess I will making fewer visits to the Salt Lick, even though they have killer bbq. I guess its not whats for dinner. Beef that is...

No comments: