Complacency is not recommended for the U.S. consumer this winter according to forecasters who say that a wide range of products from food to auto parts will see rises in retail prices. While food prices have risen over the past decade, the impending costs will be different, as they are expected to be the largest at one time over the past several years and not only due to the cost of delivering goods but because of the overnight escalation of the cost of producing plastic.

And not dissimilar to the blame game which was played from Louisiana to Washington, D.C. in the aftermath of Hurricane Katrina, we now see the corporate sector using Katrina to advantage as well. First, we had the oil companies blaming the price of gas at the pump on the price of a barrel of oil, then blaming Katrina for the shutdown of refinery operations and then on the lack of refineries in order process the imported oil the U.S. was receiving from Europe, as a result of the shutdowns from Hurricanes Katrina and Rita. The U.S. Congress is still in the initial stages of investigating how much of that is palpable.

But following the disaster in the Gulf of Mexico, U.S. consumers will also experience sticker shock beyond the pumps and their monthly heating bills. Unbeknownst to the average consumer is that the majority of plastic resins manufactured by U.S. factories are located along the Gulf Coast. Initially, the factories were shut down during the storms. Secondly, the factories require natural gas to generate the power needed to run the plastics factories. And thirdly, due to the short supplies of the raw materials or resins used in the manufacture of plastic, the three most common types have increased in price between 20 and 30 per cent to date since August 2005, with another projected 8 per cent increase by the end of November 2005, according to Plastics News, a trade publication.

Dow Chemical Co., for example, which runs a plastics factory outside of New Orleans, LA in Hahnville, LA, was forced to cancel 1,000 contracts after Hurricane Katrina, including those with Rubbermaid, Inc. and the Clorox Company. That then translates into myriad products consumed by the average American on a daily basis in which plastic is either a component of its manufacture or plastic containers or wrappings which contain another product such as food items or dry goods. For instance, the price of a gallon of milk has risen approximately 15 cents since Hurricane Katrina because of the plastic bottles in which it is distributed.

And while there is much public discourse about Americans� dependence on gasoline to run their automobiles, little argument is heard regarding U.S. dependence on plastic, other than from environmentalists. But 2006 stands to be the year in which the plastics industry is perhaps more realistically examined. The costs of polypropylene and propylene also used to create plastic have jumped as high as 62 per cent since August, and are beginning to filter down to consumers with major price increases to show in early 2006, as warehouse inventories become depleted.

Chemicals also requiring petroleum and natural gas byproducts for their production are seeing a steep rise in costs, which includes both industrial as well as consumer cleaning products for the home. Tires require petroleum in order to be made too and Cooper Tire and Rubber Co., even before the hurricanes, stated it would raise prices due to raw material shortages. Customers can expect that a tire costing $60.00 in August 2005 will now cost up to $80.00. Textile companies are weighing price increases as well, with the production of polyester requiring petroleum. The problem in the U.S. textile industry is that they must weigh the competition from textile imports, primarily from China, Mexico and India. They do not want to out-price themselves regardless of  their up to 10 per cent increases in petrochemical costs.

And then we get to fresh produce costs. It was reported that many fruits and vegetable crops were wiped out in Florida due to the several hurricanes which hit there throughout the summer and fall of 2005. But having more of a severe impact nationwide is the petrochemicals utilized in the manufacture of fertilizer, pesticides and herbicides, thus raising produce prices. Added to those costs are the woes of truckers and produce distributors alike with the cost of diesel fuel, which has not receded as much in price over the past month as regular gasoline has done. And while in the past consumers could gauge escalation in the price of produce with the price of oil, it but only tells a part of the story these days in terms of costs at the cash register.

While fuel and food are considered the two main staples to homeowners and residents nationwide, public works projects which maintain the infrastructure for residents in their homes also have to deal with price hikes. With local, state and federal budgets already passed for 2006, governments alike must deal with cost containment. It may mean the reassessment of roadwork and bridge repair projects. Also at risk is the cost of public transportation systems for daily commuters. And for railroad travelers, Amtrak fares increased 5 to 7 per cent in October 2005 but decreased discounts for monthly passes for daily commuters which translated into 10 to 20 per cent increases for riders.

Federal Reserve Chairman Alan Greenspan was recently noted as stating that �an oil-related hit to the economy probably won�t be as bad as in the 1970�s.� If that is a vote of confidence it would appear that Wall Street should be nervous. Never had the price of oil risen so rapidly as in the 1970�s, which eventually led to double-digit inflation. Yet with consumer prices in September 2005 rising the most in 25 years and wholesale prices with their biggest surge in 15 years, factory production fell by its widest margin in 23 years, supposedly due to transportation costs combined with the cost for raw materials. The forecast is not exactly sunny.

This is but little consolation for the average consumer on a fixed budget. And for the elderly and disabled on fixed incomes this appears even more troublesome as no one seems to know how much costs will rise. Perhaps much like an approaching hurricane, we similarly now await price increases across the board. And like Katrina, we do not know how they long they will go on, how wide a range of products and services will be impacted and how high the costs or damages ultimately will be.

Copyright by Diane M. Grassi

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