Instability in the Middle East, oil futures speculation, fears of peak oil whatever the actual cause, once again it’s getting a little more costly each time we have to put fuel in the car. Some of the pain associated with rising fuel prices is immediately felt, right there at the pump. Ouch. Other effects are not quite as immediate, but all consumers should be aware of the following trends:
Food prices will rise
It takes fuel to plant, care for, and transport food. Sure all consumer goods have a fuel cost associated with them, but due to the relatively high turnover rate, food -specifically perishable food- is where people will next feel the impact of rising fuel prices.
In the past, it seems I notice the cost of milk and other dairy rising first
Individuals who work for tips will likely see their income fall.
As budgets get tightened to deal with the increase in food and fuel prices, the amount of money left over for eating out and other discretionary spending will fall. Some people continue to go out and just reduce the tip, which they view as non-essential. Is it right that consumers make this choice? Of course not, but it happens. I spent ten years in food and bev, it’s just a part of the business.
Those who deliver pizza will likely be hit on two fronts.
Households who live on lower incomes will disproportionately feel the impact of rising fuel costs.
Think of everyone’s income as a pie. Regardless of how big that income is, there is a minimum that must be spent on necessities. With a lower income, that minimum is a larger piece of the pie.
So, what can you do?
The answer is not running out and buying a brand new, fuel efficient car.
Think a little more long term. The additional 15 or 20k that would be spent on that new car can buy a lot of gas. If you have any extra discretionary income -money that could be spent on treats or non-essentials- it is time to make sure you stop the outflow. Pay off any small debts, store credit card for example. Sure it’s only $20 or $30 a month, but that may be what keeps your budget in balance with the increase in fuel costs. Get rid of it, yesterday. Go all Dave Ramsey debt snowball if you can.
Check your budget for any forgotten recurring fees. Do you have membership to something you’re not using. The gym perhaps? -raises a guilty hand-
Stopping the bleeding while it’s an annoyance can save a lot of stress.
Use all of the fuel saving tips we learned the last time around.
- Walk or bike when possible
- Use mass transit when possible
- Cut all extraneous car trips -don’t make that mid-week run to the grocery store
- Plan your route – this is especially helpful if you’re going somewhere new
- Pool errands with neighbors -offer to return their library books or dry cleaning if you are going to be in that area. Chances are, they will return the favor. -This tip mostly applies to those of us who live outside of city limits.
- Before the prices trickle down, stock up on non-perishable foods -only the kind you actually eat and not outside your food budget. Get rid of one treat and buy something on sale that will last instead. Please don’t act like I’m saying run out and prepare for the zombie apocalypse. This isn’t that. This is going to be another summer with high fuel costs. If the budget to get to work has to come from the food budget, wouldn’t it be better to be ready?
Lastly please keep in mind that sometimes the lowest immediate cost has the highest price of all.
This summer look for chances to spend some money on local food producers. Maybe joining a CSA is an option you haven’t considered before. Sure you will end up with some vegetables you may not have seen before, but consider that you could be one of the individuals or families that helps prevent one more farm from going to the auction block.
Are you thinking about the cost of fuel or is it something you’ve managed to avoid?
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