Before getting to the headline, I want to remind you what CTH outlined two years ago about these massive food price increases.

You might remember me saying that processed food prices will increase at a much greater rate than fresh or lesser processed foods.  Factually, even organic products (ie. produce) could/would end up less expensive (in relative terms) to the increase in price at your supermarket, as compared to the price increases for the more processed foods.

The reason is simple, processed food use more energy; energy prices are skyrocketing; the processing costs (packaging, transportation, freezing, sanitizing, storage, warehousing and distribution etc.), at each step of the processing cycle, in addition to higher labor costs, drive up the end result of the price.

In this energy driven inflationary environment, less processing and handling equals lower overall cost increases from field to fork.  More processing, handling, distribution equals higher overall costs.  This is simply a supply chain, truism.

Into this issue comes McDonald’s Corp.  Last I heard, approximately 85% of McDonald’s business was franchise.  The franchise has to purchase the product (food) from the main company.  Supply side cost increases in the food are transferred from the company to the franchisee via higher product costs.  The restaurant is then forced to raise prices to accommodate their increased costs.  A portion of the revenue from sales then flows back to the main company.

It is important to note here, there is a natural disconnect in supply side price increases within the franchise model.  The parent company must, must, negotiate the best possible contract terms with the suppliers because the increases in costs are passed directly to the franchise.  The parent company doesn’t immediately feel any problem until the revenue from the franchise drops due to the forced raising of retail prices and diminished sales.  There is a lag.

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UPDATE: I’m sticking this to the top of the page for a little while, because there is excellent feedback in the comments section.  Awesome job with some granular detail. 

The National Transportation Safety Board (NTSB) released the preliminary findings from its investigation of the East Palestine, Ohio, train derailment. (video below)

There were three locomotives and 149 rail cars. Before the train derailed Feb. 3, the crew received a warning telling them to immediately slow and stop the train to conduct an inspection.  It was during the deceleration that a railcar carrying plastic pellets had a wheel bearing failure, according to NTSB Chair Jennifer Homendy.  [Bullet Point Video, WATCH]

Thirty-eight cars derailed and fire damaged an additional 12 cars.  Five tanker cars carry 115,580 gallons of vinyl chloride were part of the group that derailed.  Vinyl Chloride is a flammable and toxic gas used to make PVC pipe.  The initial fire was the result of the hot axle and the plastic pellets in the railcar.  According to Mrs. Homendy, there was no evidence the three-person train crew did anything wrong. She said the NTSB, so far, hasn’t identified any operational issues with the defect detectors or railroad tracks.

Full Press Conference Video Below:

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When Ohio Senator JD Vance was briefing the press earlier today, he was asked about East Palestine residents being required to sign indemnity waivers, releasing Norfolk Southern Railway from legal liability, as a requirement of having their water/air tests conducted on their property.

Senator Vance said he talked to a resident about it, then reviewed the contract and confirmed the indemnity demand.  Vance then immediately called Norfolk Southern Railroad officials and asked them about it.  According to Vance, the response from Norfolk Southern Railway was that the liability waiver was accidentally presented.  WATCH (@24:54 Prompted):

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Does anyone really believe the contingency waivers were “accidentally” presented to the residents?

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At approximately 8:55pm on February 3rd a major train derailment happened near the border between Ohio and Pennsylvania. In an Ohio town called East Palestine, a Norfolk Southern train pulling 150 cars derailed. 20 of those cars were carrying hazardous materials, including a liquified substance called “Vinyl Chloride.”

A massive explosion and fire resulted from the derailment and the nature of the cargo. In an effort to mitigate the problem, responding emergency authorities dug a trench and allowed the chemicals to burn off into the atmosphere. However, vinyl chloride turns into hydrochloric acid when it mixes with water vapor. The resulting chemical toxins can travel with wind, forming toxic clouds.

Several people in the downwind region from the initial explosion have reported health issues. Additionally, animals and fish have been reported to have been killed in the zone where the chemical cloud traveled.

There is now increasing concern about longer term impacts from the release of the chemicals including vinyl chloride.

Norfolk Southern and the EPA released the full list of chemicals that were being transported, they include:

♦Vinyl chloride: a colorless gas that is used to make polyvinyl chloride (PVC) plastics and is highly flammable and decomposes to make toxic fumes. According to the National Library of Medicine, it is also carcinogenic and can cause other health issues.

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Did you know that during hurricanes asphalt roofing shingles act like flying blades?  More on that momentarily….

Today Florida Governor Ron DeSantis was in the Punta Rassa area of South Fort Myers to celebrate a remarkable accomplishment.  The Sanibel bridges and causeway are open to civilian traffic. {Direct Rumble Link}

The massive, albeit temporary, repairs to the three spans and spoil islands have been completed three weeks after Hurricane Ian wiped them out.  A genuinely remarkable feat of engineering and git’ r done roughneck effort.  Truly an incredible accomplishment.  To check out the scale of it see PICTURES HERE.

TALLAHASSEE, Fla. — Today, Governor Ron DeSantis announced that emergency repairs to the Sanibel Causeway have been completed in 15 days, more than a week ahead of schedule. As of this morning, access to Sanibel Island has been restored for residents, reconnecting Sanibel Island to the mainland. WATCH:

“The work that has been done to restore vehicle access to Sanibel Island has been historic,” said Governor Ron DeSantis. “Cutting through bureaucratic red tape and delivering on our promise to get Sanibel Island up and running has been a top priority. By restoring access over the causeway, repair crews, first responders, emergency vehicles, business owners and residents will be better able to expedite recovery from this storm.”

“I am grateful for our dedicated team members who quite literally built a road in the Gulf in 15 days,” said FDOT Secretary Jared W. Perdue, P.E. “While the bridges were largely undamaged by the storm, portions of the causeway which connect bridge structures together were washed away by Hurricane Ian, leaving the bridges unconnected to the mainland or the island.

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No one imagined this was feasible. Every expert put the timeline for repair at around a year.  However, the git r’ done crews and the Florida Dept of Transportation have accomplished a massive feat of reconstruction in phenomenal time.  Major kudos to Florida Governor Ron DeSantis and the construction crews who worked every hour of every day, day and night, for two straight weeks and have created/built a temporary bridge to Sanibel Island. [Videos below]

Trust me, having seen the aftermath, this is absolutely remarkable.  The causeway is made up of three bridge spans (A, B, and C) and three spoil islands.

The rapid response construction crews just kept bringing truck after truck of everything imaginable including rocks, concrete slabs, gravel, sand and more to fill in the missing parts of the roadway and spoil islands.  Then they surfaced the road and are now working on paving it in record time.  Today restoration emergency crews drove across the bridges, and they anticipate opening the causeway to residents of Sanibel for civilian use on October 21st. WATCH:

Today the construction crews moved aside to allow, over 200 bucket trucks, 150 electric line and pickup trucks (LCEC, FP&L, Duke Energy) towing 50 trailers and two tractor-trailers carrying first responders to the island.

Additionally, Florida Governor Ron DeSantis was on the Fort Myers side of the bridge to celebrate the accomplishment at a press conference.  WATCH:

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Transportation Secretary Pete Buttigieg, a cabinet ideologue with zero experience in business or transportation, appears in the news admitted the high price of gasoline is part of the Biden energy agenda to push people into purchasing electric vehicles.  You’ll have a higher car payment, but you won’t pay for gasoline.  WATCH:

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[Hat Tip Mailroom] This is a very interesting little bureaucratic energy issue with big downstream ramifications.

Almost every transportation and manufacturing company uses the U.S. Energy Information Administration (EIA) “weekly publication of average diesel prices” in order to calculate shipping costs.  According to people in the industry, “this national average is what almost every trucking and logistics company bases their fuel surcharges on.”

However, on June 13th the U.S. Department of Energy, Energy Information Administration, stopped reporting the average weekly diesel price.  For almost a month companies have been using an outdated average price in order to calculate shipping costs and fuel surcharges. [See Screengrab]

Originally the EIA said, “We are implementing new methodology to estimate weekly on-highway diesel fuel prices. On June 13, we started conducting the On-Highway Diesel Fuel Price Survey using new statistical methodologies.” {LINK} However, the EIA has not updated anything since that announcement.

As a result, all of the transportation charges and fuel surcharges have been underestimated and priced for almost a full month.  The political motive for this move is transparent, it stops higher diesel prices from being passed along in the supply chain… which gives an artificial pause on inflation that comes as an outcome of higher diesel transportation costs (specifically trucking).  As explained to CTH:

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Keep all of the Biden administration visits to the Port of Los Angeles, Port of Long Beach and Port of Oakland in mind (aka the hide the ships program) as you review this pending issue with port labor unions.   The labor union contracts expired at 5:00pm today.  Massive wage increases, the result of inflation, are demanded by the unions and White House is likely to get involved (if they are not already).

In a very weird economic scenario, the Biden administration actually benefits from a port stoppage as imports are a deduction to GDP and the U.S. economy is presumably on the “zero” growth bubble.   If the Bureau of Economic Analysis (BEA) calculates a negative GDP in the second quarter (not likely for political reasons), the Biden administration would officially be responsible for a recession.  [Any delay in import quantification helps shape the economic statistics; however, Q2 ended yesterday.]

Additionally, port infrastructure specialist, John D. Porcari, is part of the Biden administration economic team.  Porcari shaped the response to the import and supply chain crisis in 2021 that formed the hilarious ‘hide the ships’ strategy.   Porcari works to prop-up the insufferable Transportation Secretary Pete Buttigieg who has no idea what he’s doing.

CALIFORNIA – LOS ANGELES, July 1 (Reuters) – The contract covering more than 22,000 workers at 29 U.S. West Coast ports expires late on Friday, dialing up worries that labor disruption could roil the nation’s battered supply chains, stoke inflation and threaten a weakening economy.

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The Environmental Protect Agency (EPA) was attempting to restrict the energy production from coal-based power plants through a regulatory cap-and-trade scheme intended to limit the emissions from electricity plants. However, by a 6-3 vote the Supreme Court said today the Clean Air Act does not give the EPA broad authority to regulate greenhouse gas emissions from power plants. [pdf Ruling Here] The regulation -if any- must come from congress, not regulatory fiat from an executive agency.

New York Post – The Supreme Court rolled back the Environmental Protection Agency’s authority to regulate greenhouse gas emissions from power plants Thursday, dealing a massive blow to the Biden administration’s plans to fight climate change.

The 6-3 decision overturned a lower court ruling that gave the federal agency virtually unlimited regulatory powers through the Clean Air Act. […] Writing for the majority, Chief Justice John Roberts agreed with the states that “it is not plausible that Congress gave EPA the authority to adopt on its own such a regulatory scheme.”

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