The war in Iran caused gas prices to skyrocket, now high oil costs are forcing grocery store items higher too
SAN ANTONIO — The war in the Middle East is not only pushing fuel costs higher, but also transportation, and that is starting to hit Americans at the grocery store. And, experts say the effects are nowhere close to as high as they could go.
Since the war in Iran began, the United Nations says food prices worldwide have gone up by more than 2%. One of the reasons – the high cost of oil makes it more expensive to ship many of the goods we consume, and the rest of the cost is far from the money mountaintop.
“That’s the biggest fear, is that not only will gas prices end up and fuel and oil prices end up, you know, causing that kind of effect, it’ll have a ripple effect elsewhere,” Prof. Jon Taylor, from UTSAs political science department said.
Dan Varroney, an economic strategist and founder of the Potomac Core added, “Especially the small business truckers, they can’t afford to, absorb those costs. So, they pass them on through the distributors, the other distributors and through the retail food stores.”
Oil isn’t the only commodity that passes through the Strait of Hormuz, but also one third of the world’s fertilizer production. The UN says global fertilizer prices could rise by as much as 20% during the first half of this year if the war persists.
The Center for Global development says when fertilizer gets more expensive, the next harvest gets smaller and costlier, with the full effects on food prices not felt up to a full year later.
“Where with the price of diesel fuel and even gasoline at the end of the conflict beginning to reduce, you won’t see the added input costs from fertilizer going away until next year,” Varroney, who is also the author of “Rethinking Economic Growth, Businesses Can Help Consistently Grow The Economy” said.
The FAO Food Price index tracks commodities therefore in March it showed wheat rose by more than 4%, vegetable oil by 5%, and sugar 7%. When the war does end, Varroney says gas will be the first prices to start coming down.
“What I’m suggesting to everyone is that we’re looking at gasoline prices coming down 2 to 3 weeks at the end of conflict,” he said.
Varonney also says even though our country is a net producer of oil, because oil is priced globally – more production here and less reliance on oil from the Middle East, will actually have little impact on gas prices here in the U.S.