RUSH: John in Burlington, Iowa, nice to have you on the program, sir, thank you for waiting and welcome.
CALLER: Yes hi, Rush.
CALLER: Thank you for letting me on.
RUSH: You bet.
CALLER: Rush, first of all let me preface my comments. I’m a conservative, I can’t stand the Clintons and Obama, I subscribe to much of what you say, but I have to respond to the ignorance in your comments on ethanol and the price of food in this country and the agricultural that’s behind it.
RUSH: Well, I’m not surprised that you have this opinion and you’re calling from Iowa about it. The primary story here that I quoted is about California, but it does mention Iowa. Walter Williams is talking about it as a Universal story nationwide.
CALLER: I’m sure. And from my viewpoint, urban folks like yourself and Walter Williams, and your members, are absolutely uninformed and uneducated and ignorant about the business of agriculture in this country and —
RUSH: I am one of the biggest supporters of agriculture. I came from an agricultural community.
CALLER: I understand that.
RUSH: I live in a town of 20,000 people, maybe 40, it’s not exactly urban.
CALLER: Well, no, but you’re urbanized now, Rush.
RUSH: I understand — (laughing) Look, I don’t mean to interrupt — in fact, can you hold? Let me take a break because I’m going to have to take a break in a couple minutes anyway and you deserve more time than this so can you hang on?
CALLER: Yes, I sure can.
RUSH: All right, we’ll be back. I’m going to give you some of the stories — details, rather, in this Sacramento Bee story and you can explain why they’re wrong, if you wish, okay? Good. I’m not going to stand in your way. Whatever you want to say will be fine. Okay.
RUSH: We rejoin John in Burlington, Iowa. Let me give you just a couple of opening paragraphs here. It might be easier for you to respond to this knowing what it says, because I didn’t detail any of what it said. It’s by Dale Kasler, it’s K-a-s-l-e-r, Sacramento Bee, published today. ‘The cash crunch at Sacramento’s Pacific Ethanol Inc. spotlights the swift decline of an industry battered by too much supply, too-expensive corn and too many increases in plant construction costs. Ethanol — hailed by some as a ‘green’ fuel that would reduce America’s dependence on foreign oil — is in a major slump here and nationwide. Across California, profit margins are vanishing, new plants are being canceled and some existing facilities are struggling. The state’s first major plant, opened in Tulare County in 2005, has suspended operations,’ and it goes on from there. Do you get the drift of this story?
RUSH: Walter Williams, a couple paragraphs from him: ‘Ethanol contains water that distillation can’t remove. As such, it can cause major damage to automobile engines, not specifically designed to burn ethanol. The water content of ethanol also risks pipeline corrosion and thus must be shipped by truck, railcar, or barge. The shipping methods are far more expensive than pipelines.’ Okay. That’s, I think, enough for you to register what your disagreements with both of these pieces are.
CALLER: Okay. Well, first of all, the — and there are other studies out there, such as the Pimentel study that go through and try and — and designate ethanol as an inefficient product that goes through an inefficient process that actually costs more energy and more money to produce than it does to use.
RUSH: That’s what Walter Williams’ piece basically says. He says it’s so costly it wouldn’t make it in a free market,’ which is why Congress has enacted subsidies, about $1.05 to $1.38 a gallon, which is no less than a tax on consumers.’ In fact, he says, it’s ‘a double tax, one in the form of ethanol subsidies and another in the form of handouts to corn farmers to the tune of nine and a half billion dollars in 2005.’
CALLER: Part of the problem with some of these studies, Rush, is that some of their information in there is flawed. You want to talk about bad science? Just one example with the Pimentel study, when they start adding up the cost that goes into producing a gallon of ethanol, they even include a cost for the sunlight that the corn crop takes to produce a bushel of corn. Now, that sunlight is free, and that cost shouldn’t even be included in there. And that’s just one example of how some of these studies are flawed.
RUSH: How are they calculating the cost of sunlight?
CALLER: You got me.
RUSH: All right, here’s —
CALLER: These are probably some of the same scientists that ascribe to global warming, Rush.
RUSH: Here’s another passage from Walter Williams. ‘Ethanol is 20 to 30% less efficient than gasoline, making it more expensive per highway mile. It takes 450 pounds of corn to produce the ethanol to fill one SUV tank, 450 pounds of corn is enough corn to feed one person for a year.’ Is that accurate?
CALLER: The energy figure, I wouldn’t necessarily prescribe as being quite that high. I use 10% ethanol personally, and I have for years. In fact, my last pickup that I had, I had over 242,000 miles on it before it was traded off, and the engine was never touched — and that engine had practically nothing but ethanol run all the way through it, for the lifetime of the truck.
RUSH: Well, see, my problem with ethanol is that I think it’s part of the global warming hoax, and what has happened is… In fact, I remember, there was a story on the American Spectator website from a person like you who lived in Iowa, who was a Republican and was highly critical of Republican critics of ethanol. His question was, ‘Where do you think Republican votes come from?’ and his point was, ‘It doesn’t matter what ethanol is or isn’t, you need the votes. If the Republicans are to win, we need the votes of people who make money off of it.’ I looked at that, and I said, ‘No, wonder we’re in trouble. Whether it works or not, whether it’s costly, whether it adds a tax, we still — in order to get Republicans elected — have to go ahead and invest in something that may be not at all what it’s claimed to be, not even be beneficial and may be harmful in fact in other areas of the economy?’ That makes Republicans no different than Democrats, if Republicans are going to say, ‘We need to subsidize some of our voters to get their votes,’ they might as well join the Democrat Party.
CALLER: Well, that part, yeah, I — I’d agree with that. I think another part of the problem is, and — and part of the problem with — that you’re ascribing to the increase in the cost of food is transportation costs. The problem isn’t so much ethanol. There is plenty of —
RUSH: No, but it’s corn and wheat, and ethanol is taking corn out of the food markets.
CALLER: No, it’s not. No, it’s not.
RUSH: Well, are we producing more corn?
CALLER: We are.
RUSH: Well, why is the price going up?
CALLER: Because — partially because overseas demand, partially because where — where gas is concerned, partially — The problem with the price of food is not ethanol, because there’s plenty of corn to go around. There’s plenty of corn to feed our livestock. There’s plenty of corn to go in everything else we use.
CALLER: When corn costs four dollars a bushel — and it’s a little higher than that right now, but I don’t have current figures — When corn costs four dollars a bushel, corn only contributes 28 cents to the price of a dozen eggs.
RUSH: Okay, so less than a minute here. So what would you say…? Are you an agriculturalist, are you in the business?
CALLER: I’ve been involved with agricultural all my life, yes. I’m a sales manager in the seed corn business.
RUSH: I figured. Full disclosure. It was important we get that out. You have obviously an explanation, then, that exempts corn from rising food prices. What is it?
CALLER: A lot of it’s transportation. Nineteen cents of each food dollar right now goes back to farmers. The remaining 81 cents is spent on labor, packaging, energy, transportation, and marketing.
RUSH: Okay. By the way, in this discussion of food prices going up, nobody that I’ve heard, and I certainly didn’t mean to imply — nor for you to infer — that rising food prices are going to the farmers and that farmers are gouging. That’s not how agriculture works. That’s not at all what I meant. I’m just saying, we’ve got a lot of stuff going on in the environment that has been promulgated primarily by liberals, to ‘help the little guy and to save the planet,’ and it’s common. The unintended consequences (or the known intended consequences, which is even more sinister) of liberal policies, which all fail, is just a sight to behold. Everybody can see it if they just be honest enough to.
RUSH: Jeff in Maryville, Tennessee, it’s great to have you with us, sir. Hello.
CALLER: Ah, dittos from the patron state of shooting stuff: Tennessee.
RUSH: Thank you, sir.
CALLER: Well, I’d like to refute what this agriculturalist was saying about ethanol because I own a small business in Jacksonville, and we sell chicken, and Florida Foods —
RUSH: Now, wait, wait, wait. Jacksonville, Tennessee?
CALLER: Jacksonville, Florida.
RUSH: Jacksonville, Florida. You own a small business that sells chickens?
CALLER: Yes. Well, chicken. We have a wing house.
CALLER: In a seven-month period —
RUSH: Wait a second. Wait a second. This is something the people of Rio Linda may know that I don’t. What is a wing house?
CALLER: Well, actually it’s Dick’s Wings. It’s kind of…. We sell chicken wings, we sell burgers, we sell wraps. You know, it’s a restaurant.
RUSH: Oh! Oh, I got it. So you got the wings of the chickens and you prepare them for like buffalo wings and that sort of thing to go out to restaurants?
CALLER: That’s right.
RUSH: Cool. Cool. Have you ever thought about advertising on this program?
CALLER: Well, you know, that’s what I’m doing right now. That is the point.
RUSH: (laughing) Yeah, without paying for it. Very smart. Okay. Touche. What’s the name of your wing business?
CALLER: It is Dick’s Wings. It originated in Florida, mainly Jacksonville, Florida; and we’re spreading up through Georgia, South Carolina, North Carolina, soon. So you’ll be seeing us.
RUSH: Wait a minute, how can you be expanding? We’re in a recession.
CALLER: (laughter) It’s really hard with the price of chicken these days, too, and that’s what I was going to get to.
RUSH: Okay, so Dick’s Wings. But you don’t sell retail, right? You sell wholesale?
CALLER: No, actually we sell retail. We sell directly to the customer, just like Hooters.
RUSH: Like Allen Brothers?
CALLER: But Allen Brothers, they’re wholesalers.
RUSH: Well, no, but they sell directly to customers, too.
CALLER: Oh. Okay.
RUSH: Now, Dick’s Wings, it’s a restaurant?
CALLER: Yes, it is.
RUSH: Oh! I thought it was a processing plant. That’s why I was confused. I was thinking, ‘What in the world are you only processing chicken wings for?’ when you said a ‘wing plant.’ You know, a plant to me is a ‘factory.’
CALLER: I wasn’t clear. I’m sorry.
RUSH: That’s my fault. Not yours. You communicated perfectly. I just didn’t know the lingo. But now I do. That’s a learning experience for both of us. What was it, Jeff, you called about? Was it’s about the food price?
CALLER: Well, no, it was about ethanol and how it affects food prices.
RUSH: The guy in Iowa said?
CALLER: That’s right. The liberal in Iowa, because I know that your liberal radar had to be going off because that guy was not a conservative. He was for subsidies and (laughing).
RUSH: Let me tell you something. No, I wasn’t. There are a lot of Republican people in Iowa, and in other corn states that really depend and come to count on these subsidies in any number of agricultural products, and when anybody starts attacking the value of the subsidy, they gotta call and defend it and protect it because they don’t want to lose it.
CALLER: Well, it’s —
RUSH: What is your evidence to support your claim on this program?
CALLER: Well, this is what I got. In the last seven months, our corn oil prices have gone up from $5 to $6.80 a gallon, and a case of chicken has gone up from $44 a case to $62 a case just in seven months.
RUSH: Ergo, food prices, by definition, are up. Not only retail, but at grocery stores?
CALLER: But not all food prices. You would expect that chickens and cows would be made probably in the same places, same areas, and with his theory about gasoline prices affecting it, you know, we haven’t had any increase in beef prices. So it’s only things that survive on or are fed on corn. You know, if chickens would eat rice, we’d be a lot better off. We probably wouldn’t be seeing the increase.
RUSH: Have you tried it?
CALLER: No, we haven’t but we are switching to rice oil to fry in.
RUSH: Really, rice oil from corn oil? Have you ever thought about coconut oil? How does that price compare?
CALLER: You know, I don’t know.
RUSH: Well, you ought to look into that. Well, the food Nazis may not let you do that. They used to pop popcorn in coconut oil in all the big-time movie theaters, and that’s what gave the theater that great smell of popcorn and the great taste.
RUSH: This two-person unit with a fax machine, called the Center for Science and the Public Interest came out and said, coconut oil clogs the arteries worse than anything, which it doesn’t. So people are now using canola oil in these movie theaters and so forth. But you ought to look into it. It would make your wings taste nothing like anybody else’s.
CALLER: I’m going to have to look into that.
RUSH: I’ll tell you what. Look, you know where to get coconut oil. You can find it.
RUSH: Just fry up some wings, or however you prepare them, for yourself and some customers, a test market, and see what comes out. I have no idea what the price of the coconut oil is, so it might be prohibitive.
CALLER: I had one question.
CALLER: Was there ever a single subsidy that ever did anything good for the consumer?
RUSH: A single subsidy that ever did anything for the consumer?
CALLER: Aside from raising prices.
RUSH: Aside from what?
CALLER: Besides raising prices. I mean, most subsidies that I see, if the government gets their hand on anything that should be free market price, the consumer gets hurt.
RUSH: Well, I’ll give you an answer. I’m long in this segment here, folks. The next one is going to be short. You could say look at the home mortgage interest deduction as a subsidy to the housing business, for example. And you could say that the home mortgage deduction has enabled a lot of people to buy homes. It’s allowed a lot of builders to build homes, and it has created revenue for people. Now, you’ll probably have some people argue that, yeah, it’s a subsidy and that therefore it’s artificial. But you try taking people’s mortgage deduction away from them, and it will be just like farmers trying to take their ethanol away from them. They’re not gonna let you do it. That would be a hard question to answer. I get your point theoretically. I’m going to think about this more. It’s a great question, Jeff. I gotta run. Don’t forget the coconut oil. Try that.