In This Article
Subscribe to Business Updates
Proctor and Gamble is combating high oil prices by switching to oil alternatives in the
manufacturing of many of its products.
High Oil Prices Hurting Profits in All Markets
by
Rachel Balik
The production costs for some surprising items have risen in step with the price of the petroleum used to manufacture them, leaving companies to face tough choices.
30-Second Summary
If you think the gas for your car has gotten expensive, just wait till you see the price tag for a new set of tires. Or a car seat. Or a host of other items that, because oil is used in their manufacturing process, are seeing corresponding price increases.
According to The New York Times, “paint, computer and television screens, mobile phones, light bulbs, cushions, paper, mattresses, car seats, carpets, steering wheels and polyesters are all made with ingredients that Dow and other chemical companies refine from oil and natural gas.” Now, rising oil prices are causing a staggering increase in the production cost of raw materials for these and many other consumer goods.
Companies compensate for the loss of profit in a variety ways. Frequently, they are compelled to lay off employees, raise prices, or both. Goodyear Tire hopes to make up the difference by marketing high-end tires to those who can still afford them. Some companies, such as Procter and Gamble, are using oil alternatives when producing material.
Rising oil prices have had negative effects on other markets as well. Flower sales have dropped due to the increase in the price of gas for deliveries and the resulting price adjustments. And people who earned money by taking away used restaurant oil are losing their income to thieves who steal the grease to convert it to biodiesel.
Americans face other changes, as well. Some analysts predict that rising oil prices will mean the end of the suburban way of life.
According to The New York Times, “paint, computer and television screens, mobile phones, light bulbs, cushions, paper, mattresses, car seats, carpets, steering wheels and polyesters are all made with ingredients that Dow and other chemical companies refine from oil and natural gas.” Now, rising oil prices are causing a staggering increase in the production cost of raw materials for these and many other consumer goods.
Companies compensate for the loss of profit in a variety ways. Frequently, they are compelled to lay off employees, raise prices, or both. Goodyear Tire hopes to make up the difference by marketing high-end tires to those who can still afford them. Some companies, such as Procter and Gamble, are using oil alternatives when producing material.
Rising oil prices have had negative effects on other markets as well. Flower sales have dropped due to the increase in the price of gas for deliveries and the resulting price adjustments. And people who earned money by taking away used restaurant oil are losing their income to thieves who steal the grease to convert it to biodiesel.
Americans face other changes, as well. Some analysts predict that rising oil prices will mean the end of the suburban way of life.
Headline Link: ‘Oil Prices Raise the Cost of Making a Range of Goods’
Companies that use petroleum to make their goods are faced with a significant rise in cost of production. The average profit of American corporations has dropped six percent since last spring, and many companies are forced to choose between finding new ways to make products, raising prices or laying off employees. Brands like Procter and Gamble have both found ways to replace oil in raw materials, and combated the strain by hiking up prices.
Source: The New York Times
Background: Oil prices keep climbing
In March 2008, oil crisis had peaked, and experts predicted correctly that they would keep climbing.
Source: findingDulcinea
Related Topics: Surprising effects of expensive gas
Rising gas prices make delivering flowers more expensive, causing price increases. As a result, business is slow, and the drop in demand for flowers is pushing some major flower companies to diversify into gifts. FTD, itself under a takeover by Internet service provider United Online, is partnering with designers Todd Oldham and Vera Wang to design items. “They’re all trying to find partnerships they can leverage to differentiate their offerings and attach a premium to it,” said Troy Mastin, an analyst at research and investment banking firm William Blair.
Source: Reuters
Once thought of as trash, restaurants’ used fryer grease is now worth money as high gas prices inspire more people to convert cooking oil to biodiesel. The higher demand has thieves stealing grease from restaurants and reselling it as biofuel. Grease theft is hurting businesses that haul used grease away from restaurants, and causing some restaurant owners to install security cameras to discourage theft.
Source: findingDulcinea
As prices rise at the gas pump, some urban policy experts predict a “painful shift” for America away from its beloved car-powered suburban culture of shopping malls, subdivisions and box retailers. Some say suburbs could become ghost towns.
Source: findingDulcinea
Most Recent Beyond The Headlines
© 2012 Dulcinea Media, Inc.
