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1 May 2011 - Where Our Tax Dollars Go

I always find it fascinating when political ambition runs headlong into a challenge in the economy, and it is happening right now. The political ambition? Barack Obama wants a second four-year term in the White House. The economic challenge? Gasoline and diesel prices ranging between $4.00 and $5.00 a gallon with some experts saying they will be above $5.00 a gallon before summer ends.

That is sending the anger level of consumers higher and the popularity level of President Obama lower, the last thing he wants as he looks toward the 2012 election. So, it should come as no surprise that a few days ago the President sent a letter to every member of Congress, urging them to immediately end tax breaks for oil and gas companies.

You may recall a few weeks ago on Samuelson Sez, I talked about those tax breaks, our taxpayer dollars going to oil and gas companies. $41-billion dollars every year going to companies that are now reporting huge profits while motorists, truckers and farmers watch their buying power drop sharply because of energy costs.

A few days ago Exxon Mobil Corporation reported its first-quarter profit; up 69% from a year ago, a profit of more than $10-billion in the first quarter. The reason is the price of oil. So we are now paying a government subsidy to a company that is making tremendous profit on what they are selling you and me. The other major oil companies have also reported sharply higher profits.

I don’t think the President’s request will get anywhere on Capitol Hill as the oil company lobbyists will be out in force telling Congress it’s a bad idea. I think the President is fully aware of that, but he will constantly remind us in the campaign that he tried to cut gas prices.

But if fuel prices aren’t enough to worry about, hear this! Did you know the world price of pepper has more than doubled in the past year. Any idea what we pay for pepper on the world market today? $5,825.00 a ton; and that is up 45% from the end of January and going higher.

The world’s largest producer of pepper is Vietnam. The largest buyer is the same country that buys our soybeans...China. And they are pushing world prices even higher. Add to that a smaller supply with Vietnam exporting only 98,000 tons of pepper this year, down 16% from last year. So watch out for higher pepper prices. One more thing to worry about!

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