Why does gas cost more than milk?
On May 18, a gallon of milk cost $3.99 while a gallon of gas cost $4.17 in San Diego. Jennifer Gilmore, the Executive of Feeding America San Diego [2], is reporting that thousands of working mothers in San Diego are using a trick that’s common in Third World nations: They’re watering down the milk they feed their children to pay for gasoline. Gilmore says the vast majority of these families are employed, yet 62% must make a monthly choice between buying food or paying for gasoline and utilities.
The reason? High oil and gas prices pack a triple punch when it comes to inflation and household budgets. Nearly all foods are fertilized, grown and fed with oil-based products. Pesticides are oil-based. The fuel used to ship and preserve your food is made from oil or oil-based hydrocarbons such as natural gas. Then, once you take your food home, you keep it cool with electricity derived from oilbased hydrocarbons – the same hydrocarbons that heat and cool your home. This makes the cost of energy – especially oil –the number one factor that determines the rate of inflation, and the chances of an economic recovery.
High energy prices mean high inflation, higher gas prices, higher food prices, and higher housing costs. Yet when the Government calculates the rate of inflation for the media, it uses what it calls the “Core Rate.”
The core rate excludes the “volatile” cost of food, housing, or fuel because these costs are trivial to the upper class.
Yet for working people, or retirees on fixed incomes, these are the only costs. Rental housing costs in San Diego have skyrocketed by 7.4% in the last year, but according to the Fed’s “Core Rate,” housing costs are down. This is why UCAN is focused like a laser beam on the cost of energy. When you disregard the collapse of real estate as a “lower housing cost,” the true rate of inflation tracks closely with the price of oil. This is why the UCAN Gas Project [3] is so important, and why UCAN's core mission of preventing higher electric costs in San Diego is critical – SDG&E already charges the highest electric rates in the nation.
Something is wrong with the market and the regulatory process when it is cheaper to fill your car with refrigerated milk than it is to fill it with gasoline. In this context, “money-saving tips” from experts telling you to “dine out less” and “use coupons” seem ludicrous. For those of us on limited incomes, it is tempting to say “Here’s a dollar, buy a clue,”but the reality is, with oil-based inflation, the cost of a clue is no longer affordable. That money was spent on gasoline and SDG&E long ago.
Learn more at www.ucan.org [4], or visit UCAN’s
Cheap Gas Locator at www.fueltracker.com [3]
Related story: The relationship between high gas prices and increased tax revenue for California [5]