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

June 09, 2008 09:02 AM
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.

Headline Link: ‘Oil Prices Raise the Cost of Making a Range of Goods’

Background: Oil prices keep climbing

Related Topics: Surprising effects of expensive gas


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