Economic Whoa

Economic Whoa
Kevin Bryant

Woke up this morning and saw that gas prices actually rose by $.10 a gallon last night. First time in several months I have actually seen an increase in prices even though the price per barrel fell by almost a dollar yesterday. Gas is still pretty low right now right at $1.38 a gallon here in KC metro. It’s better than many parts of the country.

Went shopping over the weekend to pick up a few last minute Christmas items and groceries for Christmas dinner as well what would be needed until the end of the month. Normally when I go grocery shopping, I never really look at the price I am paying per item. I usually grab what is needed or what little extra I like to get for myself like Nutter Butter cookies and those little powder coated donuts in the bag. Yes ladies, even guys have to fulfill their sweet tooth requirements every now and then.

Back in the summer, I remember a few news stories about how companies were cutting the sizes of items to offset the rising fuel cost of shipping. I was fine with that. In a free market society, companies have to make so much profit in order to keep from having to lay people off.

After the size cuts, the prices went up anyway as fuel cost continued to rise.

Now that fuel prices have fallen below levels that we have seen in the past couple of years, why is the price of groceries and other items still at or above level that they were in July & August when gas and diesel was almost $3.00 more expensive per gallon?
Haven’t these companies had plenty of time to recoup their losses from the early part of last summer?

I use on average about 15 gallons of gas a week. This means I am saving around $45 a week on gas as compared to what I was spending this past summer. The problem is, I am currently spending around 10% to 15% more on groceries and other items than when I was paying over $4 a gallon on gas.

Fuel cost is down over 60% from its peak this past summer. Prices for everyday items we eat and use is way up and still rising. Where is all the congressional hearing on this form of price gouging?

This is just another reason we are in a recession. No manufacturer, distributor or retailer is willing to lower their cost per item even though their transportation costs are significantly lower. Get these companies to lower their profit margins back to what they were at this time last year + .5% for inflation and I’d be willing to bet you would see the end of a recession. That is unless the media continues to blow everything out of proportion so it gives the appearance of Obama coming in and saving America once he is sworn in.

Update:
I originally wrote this on 17 December, 2008. Somehow it managed to get lost in the electronic black hole that emails fall into from time to time. Al should be receiving my original one sometime in late June.

In the three so weeks since writing this, here are a few samples of what has occurred here in the Heartland of America. I went shopping again last night a prices took another spike. Here are just a few examples.

Gas: Was $1.27 is now $1.63
Bread: Was $2.08 is now $2.99
Pop Tarts: Was $1.63 is now $1.89
Coke 12 pk cans: Was 4 for $12.00 is now 3 for $11.00
½ Gallon of milk: Was $2.08 is now $2.67

Here is a real shocker: On December 1st, 2008, diesel was selling at $2.07 a gallon. Today (January 8, 2009), diesel is selling at $2.07 a gallon.

Media tells us that despite lower fuel cost, Americans still are having a hard time making ends meet. My guess is that this is one of the major contributors to that.