Inflation in food and gas prices are pinching the pockets of many American families. Some families have to make a decision between the two, which is very unfortunate. However, the two are not unrelated.

A major player in production of both food and gasoline is corn. Corn is a staple ingredient that can be used in countless food products, from cereals to soft drinks. The there’s corn syrup, which is an ingredient in a ridiculous number of products. Not only do consumer products contain some variety of corn product, but it also directly impacts feed prices for livestock. Feed price and the end product that comes as a result of that livestock are directly correlated. It’s pretty easy to see why a rise in corn prices impacts the food market.

Corn prices also impact the ethanol market. Corn currently sells on average for about $7.50 a bushel, up 119% from last year. The Renewable Fuel Standard calls for increased ethanol product incrementally until 2016. The EPA requires 7.76% of gas products to be blended with ethanol. This drive to increase ethanol production will make corn a more valuable and attractive resource. Its main competitor, however, is the food market. Increasing ethanol production will raise food prices, just as decreasing ethanol production will raise gas prices but keep food prices from rising unexpectedly.

Food prices have increased 5% in the last year, and the USDA projects they’ll rise another 5.5% in 2008. Gasoline has increased around 30%, depending on which grade of gasoline you consider. Decreased yields will put further economic stress on families as they try to stretch their dollar as far as possible. If crop damage is as bad as it is estimated, the government could see another spike on its hands – the number of people on welfare. With baby boomers cashing in on social security soon, we cannot afford to have another resource depleted. As a country, we’re at a breaking point where changes need to be made to protect the economic future of young workers as well as the elderly.