[Correspondent Column] "Babo-ya, the Problem Is Inflation!"

[Image source=EPA Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] A diplomatic official I met recently asked how I was doing, saying life has become tough these days. The cost of living, including food and fuel prices, has surged all at once, but salaries have remained stagnant. Inflation has not been trivial even for diplomats, who are not ordinary citizens.

As inflation in the United States soared to 6.2%, the highest in 30 years, sighs about the fear of grocery shopping and going to gas stations can be heard everywhere.

Recently, the inflation trend has become even steeper. A sack of rice that used to cost $10.9 has surpassed $13. This reflects the price increase after all the rice stocked at the previous price was sold out.

A friend who first came to the U.S. said, "America is the land of meat." It was advice to consume meat freely because meat prices were cheap. The situation has changed. Meat prices have skyrocketed. Until September, food prices rose by 0.9%, but beef prices surged by 17.6%.

Brisket that could be bought for $10 per piece now costs $16. Anchangsal, which was often eaten because it was cheaper compared to Korea, has long disappeared from butcher shop displays. Last spring, during the height of COVID-19, meat was unavailable to buy, but prices did not rise then.

When prices soar, the popularity of national leaders falls, whether in Korea or the U.S. Recent polls show that Americans blame President Biden for the inflation.

A representative example is gasoline prices. The current average gasoline price in the U.S. is $3.4 per gallon. Diesel, used for transportation fuel, has reached $3.6. A year ago, gasoline was $2.1 per gallon.

Since taking office, President Biden has focused solely on restoring climate change measures damaged by former President Donald Trump. He canceled approvals for pipeline projects and banned new oil drilling on federal lands. The U.S.-led "shale energy revolution" of the 2010s is now a thing of the past. Shale companies, which have already lost their production base, are liquidating their businesses instead of producing oil, even though oil prices have risen above production costs.

Diplomatic efforts to increase oil production have scored zero. The White House, while shouting about climate change, requested oil-producing countries to increase production. However, no oil-producing country has heeded the U.S. request. Saudi Arabia, branded as a human rights violator by the Biden administration, and Russia, the U.S.'s eternal adversary, lead oil-producing countries that seem to have no plans to increase production. This raises questions about President Biden's capability as a diplomatic expert.

The market is already raising its oil price outlook for next year. Bank of America (BOA) has projected next year's oil price at $120 per barrel. It is not difficult to expect U.S. gasoline prices to exceed $4. Since the presence of U.S. shale oil, which played a buffering role during the 2012 oil price surge, has disappeared, there is no clear way for the U.S. to induce a drop in oil prices.

This is a tragedy brought about by a radical fossil energy exit strategy that disregards side effects. The surge in oil prices forecasts a major earthquake shaking Biden's support base. Yet, the Biden administration keeps repeating that inflation is due to COVID-19. At this point, even delusion is free.

If the 1992 U.S. presidential campaign slogan that led Bill Clinton to the presidency, "It's the economy, stupid," were to be updated for today, it might be "It's inflation, stupid." In Korea, it would naturally be "It's housing prices, stupid."