Businesses executives around the world are experiencing lighter wallets, higher blood pressure, and more logistical nightmares.
The cause? Rising gas prices.
As consumers, we feel it at the pump. But businesses also rely on efficient (read: cheap) transportation to survive. Many consumers fail to realize the effect soaring energy costs have on other commodities, such as minerals, food, and consumer goods.
So just how bad is the rippled effect of $100/barrel gasoline? Let’s take a look and see just how much rising gas prices affect everything else we buy.
Gas Prices Are Approaching Record Levels
Adjusted for inflation, even the oil crisis of 1979 only brought gas prices to about $3.50 per gallon. That’s a far cry from the $4.00 per gallon range we’re approaching. In the past two years ago, gas prices have nearly doubled in the US, and crude oil is now regularly topping $100 a barrel.
We’ve Got It Pretty Good Here in the U.S.
But maybe Americans shouldn’t complain. Taking a look at some global gas prices, other consumers across the world are paying much more for gas—mainly due to higher taxes.
Higher Gas Prices Are Causing Businesses to Raise Prices
Many fail to think about how increasing transportation costs lead to more expensive raw materials and consumer packaged goods. It seems like the only companies profiting are the ones processing that Texas tea.
Commodity Prices Are Soaring
There has been a direct correlation between the rise in energy prices, and increases in commodity prices. To show you what I mean, here’s price data that compares January 2010 to January 2011.
To-Date, PPI and CPI Inflation Has Remained Tame
To see how large of an effect this really is, one need only look at the rise of the US price indexes over the past few months.