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Brandon: Soaring oil costs

If you’ve been to the supermarket with any frequency, you’ve been aware of the rather significant increases in prices, particularly for fresh produce and other items with a rapid turnover.

These increases are more visible than for packaged items, where the manufacturers as often as not employ the smoke-and-mirrors tactic of marginally reducing the size/weight of the package while maintaining price. It’s a price increase just the same, but if the consumer doesn’t notice that the package now contains 15 ounces instead of 16 ounces, or the TP roll only has 250 sheets instead of 300, well then, who’s the wiser?

Regardless, a major influence on the escalation in prices for supermarket items is the upward spiral of transportation costs involved in moving goods from farm to processor to local stores. Oil prices have been setting new records almost daily, as have those for diesel, the fuel that moves most of the goods in this country.

So, Joe and Jane Taxpayer, are not only paying through the nose every time they fill up their SUV at the gas pump, they’re also paying more for almost everything they buy, including services and utility costs — all are taking a bigger bite out of their income as higher energy/transportation costs spread through every segment of the economy and untold billions of dollars flow into Big Oil’s coffers.

The breaking of the $60-per-barrel price level for oil was an important occurrence, market analysts said, because it represented the hurdling of a psychological barrier, and now that it’s done, the outlook is for prices to move even higher.

And while people may gripe and moan, but still pay $2.50 or $3 per gallon for gasoline so they can get to their jobs and take the kids to school and do all the other things a mobile society requires nowadays, they may be less inclined to buy a new cotton shirt, carpet, furniture, or other discretionary items.

Though analysts contend the economy has been expanding sufficiently to shrug off the energy price increases, it’s not a disparity that can be accommodated indefinitely. And any major disruption in the energy pipeline, terror-related or whatever, could make current energy prices seem bargain basement and grind the economy to a standstill.

Last week, the Senate passed an $18 billion energy bill, and leaders in both parties have been trumpeting its supposed benefits. But it’s by no means a done deal; it still faces major hurdles in the House.

Granted, there are provisions beneficial to agriculture, ethanol, and alternative energies, including nuclear, but the reality is that it’s still slanted toward fossil fuels and Big Oil.

President Bush was quoted prior to the legislation’s passing as saying he looks forward to the day when “an American president will say, ‘Show me the crop report’ as opposed to ‘How many barrels of crude oil are we importing?’”

Alas, Mr. Bush is likely to be well into his dotage ere that has a chance of happening. Were the legislation enacted today, experts say, it would be at least 10 years before there would be any appreciable impact on U.S. oil imports.


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