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Standing at the gas pump, it’s easy to see how oil prices hit your wallet. But did you know that same price of crude is also the #1 reason your grocery bill is higher? Let’s see why.
Gas Tanks
Truck drivers who bring food to the grocery store have taken a beating at the gas pump – even more than you have. The cost of diesel has jumped twice as much as regular unleaded gas. The national average for diesel is hovering above $4 a gallon.
How bad is it? Truck drivers are paying 164% more than they did 5 years ago. That means it cost them an additional $756 to fuel up a typical tractor-trailer. You read right – $756 more! To keep on truckin,’ trucking companies need to pass some of that increase onto food companies, grocery stores, and the end consumer. There is hope though. Learn more.
Oil-Based Products
Everything from Styrofoam egg cartons to plastic wrapping around juice boxes is made from petroleum. In the last five 
years, the price of high-density polyethylene used to make milk jugs is up 144%, according to Plastics News. In that same span, the price of plastic used for soda and water bottles is up 65%. Food companies try to absorb as much of this costs as possible, but sometimes they need to raise prices to recoup. There’s a new kind of plastic on the horizon though. Learn more.
Foods that are packaged for convenience, such as individualized meals and microwavable dishes, are more expensive than other items on the grocery shelves. These speedy treats typically use more plastic packaging too – hitting your pocketbook with a double whammy. By reducing the number of convenience foods you buy, you can significantly cut your grocery bill. Learn more.
Electric Bills
Is your budget billing going up? You’re not alone. Food companies have to pay more for the electricity they use to process and package the food so that it is safe and convenient for you. Oil, coal, and natural gas provide this power, but the energy source that may have the most potential to drop electricity prices may be an oldie, but a goodie. Learn more.
| Accroding to the Council on Foreign Relations |
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"Rising energy prices have direct causal implications for the food market. Fuel is used in several aspects of the agricultural production process, including fertilization, processing, and transportation. The percentage of total agricultural input expenditures directed toward energy costs has risen significantly in recent years. A briefing from the U.S. Department of Agriculture notes that the U.S. agricultural industry’s total expenditures on fuel and oil are forecast to rise 12.6% in 2008, following a rise of 11.5 percent in 2007. These costs are typically passed along to customers and are reflected in global spot prices (i.e. the current price a commodity trades for at market). The input costs of electricity have also risen, furthering the burden. Though it isn’t itself an energy product, fertilizer is an energy-intensive expense, particularly when substantial transport costs are borne by local farmers—so that expense, too, is reflected in the final price of foodstuffs. (Beyond direct causation, energy prices are also correlated to food prices, in the sense that many of the same factors pushing up energy prices—population trends, for instance, or market speculation—also affect food prices.)" |
Useful Links
Daily Price of Diesel