Notable Issues in the News for Week 5/29/2022

Infant formula shortage. The United States has four major manufacturers of infant formula. One company stopped production the second week in May following a contamination issue. A court ordered the company to not restart production without its clearance. Once cleared, it will take about six to eight weeks to restock all locations for its markets. Formula is available from Europe, but it has been closed to the US by the CDC for labeling issues.

Inflation is continuing to rise, with no sign of a change in direction from its 8.3% for twelve months ending April 2022. The continuation of inflation is the number one issue in polls as the most important problem to be solved. President Biden has addressed inflation by proposing higher taxes, increased government spending and more regulation. It is a rule of thumb that inflation will take twice as much time to reduce as was taken to rise.

Prices of gasoline have been on a devastating upward climb with no sign of relief. During President Biden’s tenure he has cancelled oil-producing land leases.and stopped infrastructure spending on oil pipelines between the United States and Canada.

Gasoline is a separate category of inflation for the United States. The US is the largest supplier of natural gas, surpassing Russia in 2011, and of petroleum, surpassing Saudi Arabia in 2018. In 2019 the US produced more oil – 12.97 million barrels per day – than anytime thereafter. Currently, production is down to 11.3 million barrels in February, 2022 (the latest date on record). It is obvious that without oil being produced, there will be no gasoline.

Every issue noted above has one or more solutions in the hands of a
Few people in the government having power to make changes

A government sponsored monopoly has, since 1969, controlled infant formula marketing and distribution. Today, that is a $4 billion market. The Agriculture Department has a Special Supplemental Nutrition Program for Women, Infants and Children, referred to as “WIC”. The WIC Program provides grants to states for low-income pregnant, breastfeeding and nonbreastfeeding postpartum women. Infants and children up to the age of 5, and who are at nutritional risk, are also covered. The WIC Program is a sole-source supplier to the State WIC Programs. The Agriculture Department also administers distribution to 46,000 private outlets among groceries, physician offices and such, and receives rebates from manufacturers. European manufacturers are kept out of the market because of the CDC’s refusal to accept European labeling. It is obvious that European Manufacturers are not in the WIC Program, and but for the CDC, would have access to the 46,000 outlets who customers are the general public. It seems probable the general public has carried the brunt of the problems of temporary shortages, and the four USA manufacturers have a captive market. This program is a classic form of “Regulatory Capture” benefitting the formula makers.

Inflation was predicted as a real outcome of the massive Covid-19 Relief Bill and the Build-Back-Better and Infrastructure Bills. It remains for a new administration to solve the inflation, which will only occur if competent people are put in place, for which there is no assurance.

Not mentioned in the gasoline woes, are the facts that the Sanctions on Russia include having the Europeans forego buying energy from Russia, and that the United States and other oil-producing countries begin producing excess oil to be transported to Europe to cover what would have been sold by Russia. The US has an obligation to be part of that agreement, so what the government did not do timely is going to have to be done in double-time. May 30, 2022