Why is the US selling its grain for $7 a bushel when we're paying $136 a barrel for their oil?

Question

What's wrong with this picture? to me, it's just another example of how we're (obviously) not sufficiently teaching math skills in our public school system?

Answer 1

I agree with the questioner Brian Weir.  It's all about our priorities.  We all have to eat.  Alternatively, it probably wouldn't kill most of us to walk or bicycle once in a while.

Take your pick:  have food to eat or drive your 9 mpg SUV.  Choose one or the other, and price it accordingly.

Answer 2

Oil and grain are two different commodities, hence they have different prices. Also, the US has more sources of revenue than grain exports, enabling the US to import oil.

Answer 3

I'm confused, where do you live?

Answer 4

That is not so. What is happening is that the U.S. dollar is currently depreciation (becoming weaker) in the international market. Because of this, we have to sell our products accordingly and cannot sell them for higher prices. As for the price of oil, it is simple supply and demand. Since there is en ever increasing demand for oil and a limited supply, the market price of oil skyrockets because of the scarcity of oil. As for the math part, it is true that we must focus more in this area, but it does not almost have anything to do with the corn and oil prices.

Answer 5

thats how it works, china obviously is having a large effect on oil prices and countries in the middle east as well in south america are realizing that they can sell their product for more money.  i agree, maybe we should be jacking our prices up a little bit too, that is - if no one else can produce it cheaper.

Answer 6

Grain costs less than oil!  We could charge $500/bushel and then the world would buy grain from Canada at the market value of $7.  

You might ask why people play hundred of dollars for gold when gravel sells for pennies.  Both are useful but there is way more of one than the other and the demand for one is way higher than the other.

Answer 7

their obviously not teaching economics. grain is unlimited, we can grow it year after year. oil is limited there is only so much in the ground.

now apply this to the laws of supply and demand and you will figure it out.

Answer 8

I don't see anthing wrong with the picture.  You are comparing two completely different things entirely.

"Obviously" you weren't taught about the laws of supply and demand, the cornerstones of any economy.  

Grain which is used mostly in food products is not something people would pay $136 for a bushel.  Companies would love to charge that much for it, but the fact is that demand is not high enough to constitute that price.  In addition, there are a variety of subsitutes, government regulations, and its scarcity is relatively low.  These are all some of the factors that keep the price of grain low.  Not to mention it is much more expensive to pump, refine, and ship oil than to grow grain.

However, oil is a lifeblood of our economy.  Over the past 100 years we have geared our economy to be dependent upon oil.  It ships the grain to refineries, packages most of our food, and in some cases generates the electricity that powers your home.

There is something wrong with our skyrocketing oil prices, but in reality its wrong that we haven't been paying what everyone else around the world pays for it.  In Europe the price of a liter is about twice that of 1/4 gallon here.  

I would suggest you take an economics course before you start comparing oil to grain on a price scale.  Where the demand meets the supply is the equilibrium price and quantity supplied.  Any deviations from that equilibrium will cause either demand or supply to shift back to equilibrium.

Answer 9

Well it all has to do with supply & demand.  If we start selling grain at a higher price, people will look elsewhere or substitute another product if our price is not competitive.  With oil there are not that many substitutes, only controlled useage will bring down the demand & in developing countries demand will only go up, further stretching the oil supply & raising prices.  We have been very slow in this country to develop alternative methods of energy, and the SUV rage over the last 10 years, until recently, didn't help any.  If everyone in this country became more energy conscious, it would help bring prices down...but when you bring the price down, everyone forgets, price goes up & the cycle will start again.

Now we have a wake up call and have not really blamed ourselves for the position we are in.