Oil Surges to $109 But EVERYTHING Costs More

Mostly, these days, people are only worried about how the ever-rising oil prices will change the price of gasoline. This is a logical worry, but prices at the pump are just the first step in this new version of trickle down economics. In this case, the costs trickle down a chain-of-use.



Oil costs $109 per barrel today (http://snipurl.com/21io3 ) and that will make gasoline prices higher and then other things made with oil will cost more (like gasoline and plastics). After that, the things that we need oil-related products to get will cost more. These are things like FOOD.



See, you need gasoline and oil to farm the land. You need more to get the food to market. Every step of the way we rely on oil-products and, therefore, every step of the way will get more expensive.



In fact, food prices in the US have already started to climb. The above screencap comes from a March 9, 2008 article from Boston.com (here: http://snipurl.com/21iom ) that reports:



"After nearly two decades of low food inflation, prices for staples such as bread, milk, eggs, and flour are rising sharply, surging in the past year at double-digit rates, according to the Labor Department. Milk prices, for example, increased 26 percent over the year. Egg prices jumped 40 percent.



"Escalating food costs could present a greater problem than soaring oil prices for the national economy because the average household spends three times as much for food as for gasoline. Food accounts for about 13 percent of household spending compared with about 4 percent for gas."



Of course, our gas is already more expensive. Now our food prices are going up. Those are the two most immediately important things to spend money on. This means we'll spend less on the other things we enjoy in life.



If it gets much worse, we'll only be spending money on food to keep us alive and fuel, which allows us to get to work. Work gives us money to buy food and fuel and...the circle of life continues!



I'm just glad I'm planning on moving to a city with a good public transit system!
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