To Put this issue of higher consumer products in perspective, Truck Drivers are paying $3.80 - $4.25 per gallon right now to fill up. Thats $500 - $1200 to fill up their tanks before they ever get paid for the freight that they hall (typically pays on terms after delivered).
My father is a truck driver and if you look at the load boards (think ebay for freight loads), there are many shipments that are not shipping at all because they are only paying about $2 a mile. That doesn't cover the cost of fuel and those rates used to look attractive to many truck drivers.
Now, lets put the cost of things in to perspective.
No freight, equals no stuff in the stores, and that means the prices are completely arbitrary.
Low supply equals high demand and that translates into very high prices.
Well the problem with that scenario is that many retail chains such as Wal-Mart have product prices locked up with their suppliers contracts and freight is typically locked up as a percentage of cost.
That means that if suppliers pay higher prices to ship crap from China to the US, or if China pays a higher energy cost to produce crap to later be shipped, that higher price can not be passed on to retailers. Furthermore, the suppliers have to eat the higher freight costs because the retailers will not.
That means that their only option is to do business at a loss or stop shipping products to the major retailers.
This is an on going dilemma by the way.
To complicate things more, Wal-Mart who is also a grocery store these days has been working since about December to keep prices on many grocery products arbitrarily low. They have been shaving about 30 percent of the price out of their own margins hoping to attract more customers into Wal-Mart to make up for bad sales.
Now, I was just at Wal-mart the other night and could see the price of milk for example. The promo milk prices are about $3.78 a gallon there. The non promo milk is $5.75 a gallon at Wal-Mart.
Now Wal-Mart (as Hillary Clinton can attest after running the company from the board of directors for several years in the late 80's and early nineties) is one of the most efficient corporations in the world and most effective at sales growth and generating a profit.
They are not keeping prices low to be nice to Americans. They are doing it to hook more people on their stores and up sell them on the other crap (floated over from china). [Look at it like crack dealers hooking school kids on crack in the late 80's]
The thing is they will not keep the prices low for ever. Not even Wal-Mart can afford to subsidize the entire US population. The Wal-mart stimulus plan by the way is rapidly approaching the size of the US government stimulus plan.
When Wal-Mart pulls the plug on their teaser rates, then we are going to have a very nasty wake up call about the real price of milk and other products.
My advice, go plant a big freaking garden this year so that you have enough food to survive the winter.
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