$8/gallon?

The national average for gas prices hit $4.05/gallon in the U.S. today--with no end in sight to rising gas and oil prices. Congress has called for an investigation into market manipulation. Americans drove 5% less this Memorial Day than last year--demand is down, supply is up. The law of supply and demand would seem to indicate that prices should be coming down, albeit moderately. The one thing that continues to drive up prices is a fear of conflict in the Middle East.

Today, President Bush is making his last European tour. On the trip, he urged German Chancellor Angela Merkel to cut all business ties with Iran. All of this is fueling fears about Middle East tensions.

Even more dramatically, news was released last week that Congress and the Pentagon were considering allowing Israel to purchase new U.S. F-22 fighter jets. The current policy is not to export these planes to anyone---not even our closest allies (Japan was denied these new planes). The Israeli PM indicated that Israel would consider attacking Iran if it thought that Tehran continued to pursue nuclear weapons.

Clearly, Iran poses a serious threat to Israel, and would be an even greater threat with nuclear weapons, so the Israeli position is somewhat understandable.

What does all of this have to do with the F-22 and gas prices? The F-22 is our most advanced fighter--it is actually a stealth fighter and is very difficult to detect using conventional radar. When President Bush met with Ehud Olmert (Israeli PM) last week, it was rumored that Olmert specifically asked the President for the F-22. With the F-22, Israel could launch an assault on Iran much more easily, especially with the stealth technology. As time goes by, Iran continues to enhance their defenses to the point where some of Israel's other fighters might be in danger should an assault be launched. The F-22 would be the perfect option for a quick, surgical attack on Iran.

All of this has fuelled speculation in some circles that Israel may intend to attack Iran if no progress is made on the nuclear weapons front sooner rather than later. Keep in mind that this is all rumor and pure speculation---but it seems that it is speculation and rumor that has been the driving force behind the upward trend in oil prices for the last couple of weeks. While Israel may be limited in its options in this regard, one thing is for sure: it spells higher gas prices for everyone.

An attack on Iran could lead to widespread tension in the Middle East--maybe even war. It is time to prepare for higher gas prices, and finally wean ourselves off of the oil that we are so dependent on.

The Trouble With Ethanol

Congress and the President have passed countless laws and measures aimed at building America's ethanol industry. It is done in the name of decreasing dependence on foreign oil, and making America "energy independent." There are tax incentives in place, massive tarrifs on imported ethanol and more which have pushed farmers to divert production away from food towards fuel. Ethanol isn't inherently bad--in fact, it could be a very viable way to decrease our independence. The problem is CORN ETHANOL. Corn ethanol is at least 5-6 times less efficient than ethanol that can produced from sugar cane, or other plants, like switch grass.

What does this mean for the average American? Because the majority of the ethanol that is produced in this country is made from corn, it means broad price increases across the board. Farmers realize that they can make much more by growing corn as oppossed to other crops. It is hard to blame farmers throughout this crisis, who typically have a difficult time and often get little for their crops--they are just doing what makes economic sense. The consequences for the rest of the country have been stark: already, the price of wheat is up a whopping 120% this year alone. This translates into higher prices for basic staples like bread and baked goods. In America, this price increase has been hard enough, but around the rest of the world, it has been even worse. Even though we often do not feel like it, the average American is still much better off than citizens in other countries around the world, particularly in the developing world. A 120% increase a basic necessity in developing countries has had severe consequences. Already, there have been massive riots in countries from Haiti to Egypt. Recent price increases actually forced the Haitian Prime Minister from office, under threat from armed and angry mobs. In the future, if we continue to divert wheat and other crop production to corn, we can expect to see this kind of instability increase dramatically, and for more consequences to be felt here at home as well.

For much of the last several decades, the world has been largely reliant on the United States to supply food. Even though the US typically runs a large trade deficit, $708.5 billion in 2007 alone--one bright spot has always been US agricultural exports. The US typically exports billions of dollars worth of corn, beef and other farm-related products. Many developing countries have gotten used to low US prices and cheap US agricultural goods--only to find them snatched away by increasing artificial demand for corn, driven by government tax incentives. This only exacerbates hunger problems around the world. In addition, groups such as USAID (the US governments official humanitarian aid agency) are no longer able to provide the kind of food aid that they did in the past--everything costs more, even to these important groups. As a result, important gains that were made over the course of the last decade particularly in nutrition and in reversing malnutrition are slipping away.

Despite all of the negative news, ethanol doesn't have to be a bad thing. Ethanol produced from sugarcane or switch grass has more energy potential with less human cost. Some in Congress are just beginning to come around. Rep. Jeff Flake of Arizona recently proposed measures that would remove all tariffs and tax incentives--a step which would certainly decrease demand for ethanol which has been inflated by the federal government. However, the Representative should be careful not to elminiate incentives for more efficient ethanol production, such as sugarcane or switch grass.

One of America's top national security goals--if not the top national security goal should be to pursue energy independence. However, lawmakers must realize that this cannot come at the expense of average Americans who are facing dramatically higher costs, and people around the world who face food that they can no longer afford and rising instability. More investment in alternative ethanol and other promising alternative energies must become a priority sooner, rather than later.