In his State of the Union address President Joe Biden tackled issues underlying inflation – high gasoline prices, high drug prices, and excessive freight charges.
His promises on those fronts are hollow.
Take the promise to reduce gasoline prices now at a record $1.60 a litre in much of the United States.
Biden’s solution and that of other allies was to remove 60 million barrels of oil from national reserves into the consumer market. About 30 million barrels come from U.S reserves.
Unfortunately for gasoline consumers the math doesn’t add up to much impact.
The world uses 97 million barrels of oil every day so all the hoopla about oil reserve release amounts to less than one day’s use.
The most significant increase in oil prices arises from the sanctions on Russia.
Biden’s promise to reduce drug prices has no teeth either. The health care/drug lobby in the United States is so powerful — made so by greasing the campaigns of various politicians – that Biden has little chance of changing anything.
Big pharma insists it needs the high prices to recover the millions invested in drugs development over a long period of years while the patent is still in force.
Patents come into force when the drug is registered not years later when it is becomes commercial, thus shortening the time to make a profit.
No other president, including Donald Trump, has been successful in reducing drug prices.
If Biden could get agreement a national bid system for drugs could have impact on prices as it has in Canada.
The U.S. president also went after high marine freight charges, often 10 times the pre-pandemic rate.
Again what can he do that won't make the situation worse?
The excessive freight rates occurred from a number of issues, one being a shortage of port loadings as Chinese workers with COVID cut the number of employees available. Some ports were even closed for a while
Once the pandemic’s first wave was over everybody wanted to ship by container at the same time but there weren’t enough container ships or containers to meet the demand. Thus they were rationed to the highest bidders.
When containers did get to port in America there weren’t enough truck drivers to haul them away.
Much of the truck driver shortage can be attributed to their compensation. U.S. practice only pays drivers for road time not for waiting time.
Why work with containers and wait up to two days without pay for a load when you can drive elsewhere?
Ron Walter can be reached at [email protected]
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
