June 21, 1979

A Bushel Of Wheat For A Barrel Of Oil

"A bushel of wheat for a barrel of oil!"

The motorist banged his fist on the hood of my car to emphasize his angry declaration.

We had been waiting in a Washington, D.C., gas line for about fifteen minutes.  We had about that much more time to wait -- not too bad for midmorning -- for our turn to buy $8 worth of gasoline.

Frustrations of drivers I queried were attributed in about equal degrees to the OPEC cartel, government regulations, and oil companies.

The oft expressed retaliation to foreign oil producers reflects a growing desire of Americans to fight fire with fire.

It is not clear, however, whether the U.S. can effectively counter a smooth working oil monopoly with uncertain wheat production.  The views of leaders in the nation's capital are tentative.

The proposal undoubtedly will come up again this week when the major wheat exporting countries meet in London to try.  and draw up a "trading agreement." Previous attempts to set prices and quotas -- in Geneva last year and Toronto last month -- collapsed when the word "cartel" was set to their efforts.

Representatives of the American Agricultural Movement and the National Farmer's Organization think the current gasoline shortages have created an atmosphere for militant action.

Secretary of Agriculture Bob Bergland supports an international trade agreement for wheat but oppones an OPEC-type cartel.

"A cartel will not work," he says.  "There are too many people producing wheat and too many substitutes for it."  The Australians, for example, are adamant in refusing even to discuss the subject.

Glen Tussey, spokesman for the American Farm Bureau, describes the proposal to match wheat against oil as a "no-win" situation.

"Even though Iran consumes a lot of bread, and the Saudis are bread eaters, we're still talking about peanuts," he says., "As a group, these nations only import 10 million tons of wheat, and they get only half of that from the U.S.  That's nothing.  They can find that much wheat anywhere."

White House officials approach the problem cautiously.  They would like very much to have some leverage with the OPEC cartel but fear the consequences of a high wheat price.

The difficulty, they point out, is that challenged oil remains safely stored underground indefinitely at no cost.  Wheat, on the other hand, is expensive to store, deteriorates and piles up cost with succeeding harvests.

Oil can wait for the best market.  Wheat must come to terms with the market or lose all.

A wheat-state Senator, Henry Bellmon of Oklahoma, speaks for many farmers: "We want to push prices higher but not so high that countries either switch to substitutes like rice or corn; or that others, like Brazil and Australia, begin clearing lands and moving more heavily into the market."

Militant farmers disagree with a timid approach to use of wheat as an international weapon.

Joyce Robinson, a Montana rancher and AAM representatively lobbies for a high price of $5 a bushel for wheat - about $1.50 above the current price.  "With 70 percent of the market between them, the U.S. and Canada can control enough to call the shots," she says.

"It could easily be done right now with Mexico.  They need grain and we need oil.  It doesn't have to be a stand off between a bushel of grain for a barrel of oil.  That's a little extreme.  The idea of bartering is the thing," states Robinson,

The NFO would like the government to subsidize more grain elevators so wheat could be kept off the market until the oil countries were ready to play ball.  This would be a cost factor falling on tax payers but more than compensated by lower priced oil.

Right now American motorists are mad enough to strike back at any likely culprit for the gas shortage.  But the real world of international trade is remarkably resistant to restraint.

Our blockade against Cuba a few years ago become largely symbolic because our Canadian friends sold wheat to Castro as readily as did the Russians.  Indeed, American wheat traders participated in the traffic by selling wheat to the Canadians who resold it at a markup to Cuba.

Even the vaunted OPEC monopoly is subject to frequent lapses.  When the oil market gets soft the Saudis undercut the official price.  Arabian oil finds its way into Israeli autos via U.S. purchasers.

The American and Canadian wheat industry is too diversified in ownership to achieve monopoly control.  When 300 highly motivated OPEC ministers, representing only 10 oil sources can't quite lock up a market, it is day dreaming to expect united action from 50,000 independent wheat farmers.

The whole concept of cartels is 421 old-world evil contrary to free-enterprise, anti-trust principles.  It is a tempting idea under present provocations, but inherently distasteful to Americans.

We may not be able to pit wheat against oil, but we can apply the same defense that neutralizes grain as a political weapon: independence through alternate sources.  There are several substitute technologies we can develop for oil energy.  There are reserves of petroleum outside the OPEC countries yet untapped.

A free society may be temporarily exploited, but the combined power of thought and action by millions of indignant individuals thumping car hoods is unbeatable.

Author: Lindsey Williams

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