Oil is poised to break the century mark, and SmartMoney has a short article that examines the effects it will have on the average American’s budget. A couple of reasons why we haven’t felt more of these effects so far is that the rising cost has largely been eaten by oil refining companies and their gas stations, and because consumers have actually begun to reduce their gas consumption. However, if the price-per-barrel continues to rise, the U.S. faces a cold winter, and the dollar continues its anemic performance, you can look forward to the following consequences:
- gasoline prices – In a surprise to no one, they’ll go higher.
- home heating costs – If you use heating oil, you could see a steep increase of over 25%. Homes using natural gas may see an increase of about 10%. Propane households will see a 20% increase, while homes that heat with electricity should expect a relatively small 2.7% bump.
- airfare – Airlines will want to raise prices because jet fuel is already an enormous expense for them—but unless the whole industry plays along, it’s a risky thing to do. There’s a good chance international fares will go up while domestic fares remain relatively competitive, especially if the economy remains soft.
- shipping – Ah, the hidden cost of online shopping! You can expect retailers to offer discounts or free shipping during the holiday season, but rates may go up after that passes. Higher transportation costs can also trickle down into things like groceries, so prices may go up there as well.