In brief: Continuing Midwest drought conditions are pushing global food prices higher

ST. LOUIS – The Plains states where the production of corn and soybeans is key are being hit harder by excessive drought conditions in the wake of the hottest month on record in the continental U.S., contributing to a surge in global food prices.

The weekly U.S. Drought Monitor map released Thursday showed that the amount of the contiguous U.S. mired in drought conditions dropped a little more than 1 percentage point, to 78.14 percent as of Tuesday. But the expanse still gripped by extreme or exceptional drought – the two worst classifications – rose to 24.14 percent, up nearly 2 percentage points from the previous week.

Growers in Iowa – the nation’s biggest corn and soybean producer – saw their conditions further deteriorate, with the amount of that state in extreme or exceptional drought more than doubling from 30.74 percent last week to 69.14 percent now.

Severe drought punishing the U.S.’s midsection has sent corn prices soaring by almost 23 percent, and expectations of worsened crop prospects in Russia because of dry weather sent world wheat prices up 19 percent, according to the FAO, which keeps close tabs on volatile global prices.

The FAO said its overall food price index climbed 6 percentage points in July, although it was well below the peak reached in February 2011. The FAO’s index, considered a global benchmark used to track market volatility and price trends, measures the monthly price changes for a basket of food items including cereals, oils and fats, meat, dairy products and sugar.

CBO study: Drilling on federal land wouldn’t bring in great deal of revenue

WASHINGTON – Opening nearly all federal land to oil and gas drilling – including the Arctic National Wildlife Refuge – would bring modest revenue to the U.S. Treasury over the next decade, according to a new report by the nonpartisan Congressional Budget Office prepared at the behest of Republican lawmakers.

If opened to drilling, the refuge and parts of the Atlantic, Pacific and Florida coasts together would yield $7 billion over the next decade, the CBO found. That’s less than 5 percent of the $150 billion the federal budget already stands to get in that time from oil and gas leases on federal land already open to drilling.

The CBO report seems to counter long-standing claims by the oil and gas industry and their political allies that opening land now off-limits to development would provide considerable revenue to the federal government and help reduce the national debt. Industry and its allies also assert that removing drilling limits would free the United States from dependence on foreign oil.

House Budget Committee Chairman Paul Ryan, R-Wis., who requested the report, did not immediately respond to a request for comment.

For its calculations, the CBO cited estimates of 8 billion barrels of oil within the Arctic Refuge. However, the Energy Information Administration – the research and analysis arm of the Energy Department – says the range is more likely 1.9 billion to 4 billion barrels.

Using the higher estimate, the CBO found that opening the ecologically sensitive wildlife refuge to oil and gas production would yield $5 billion over the next 10 years – 50 to 90 percent of which would go to Alaska under current law.

Opening more of the American coastline to oil and gas development would yield an additional $2 billion over 10 years, to be divided between federal and state authorities, the CBO said.