Oil Hits $110/Barrel, Our Input Costs Continue to Rise

Seeing that Crude Oil hit $110 today, I thought I would post a few charts showing the performance of oil, gas prices and steel over a one year period. As you can see, all three have been moving consistently to the upside over the course of the last year to date. This is troublesome for a number of reasons both personally and from a business standpoint.

Below are yearly charts of the daily contracts for WTI light crude oil, a fund that tracks the price of gasoline and the Dow Jones Index that tracks the price of steel.

Click image to enlarge:

Personally the rise in commodity and fuel prices will in turn move the price of food and other household items higher. This inflationary pressure can become hard to manage in the economy that we now face with many people out of work and most micro and small businesses running at half capacity.

For us the upward trend in steel prices will eventually mean our prices will need to rise. This will hurt an already tough business environment of slow traffic and higher household input costs on our customers. The cycle will soon become unsustainable for a micro business like ours. I wrote a blog post the other day about having to cut costs in these situations and that is something we will do. However, as a micro business there are only so many things you can cut that will ultimately affect the bottom line.

Source:
Stockcharts.com

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Posted on April 7, 2011 and filed under Uncategorized.