Oil Is Everywhere
When people hear “oil prices,” they think of gas stations. But oil’s impact goes far beyond driving:
- Food production: Tractors, harvesters, and food processing all run on fuel. Fertilizers are made from natural gas.
- Shipping: Every product you buy was transported by truck, ship, or plane — all powered by petroleum.
- Manufacturing: Plastics, chemicals, pharmaceuticals, and textiles all use oil-based inputs.
- Heating: Millions of homes worldwide use oil or natural gas for heat.
- Electricity: Many power plants burn natural gas, which rises in price alongside oil.
The Multiplier Effect
A $1 increase in oil doesn’t just add $1 to prices. It compounds:
- Higher fuel costs increase transport costs for raw materials
- Those raw materials cost more to process (energy-intensive manufacturing)
- Finished goods cost more to ship to warehouses
- Last-mile delivery to your door costs more too
Each step adds cost, which is why a 35% oil price increase can result in much larger price increases for everyday goods.
Sources: IEA, CNBC, EIA