Gas prices making local shopping more appealing

The price of gas is changing the way the world does business. An electric car, the Tulsa, was going to have its body parts built in China, the assembly done in Ireland and the final installation of the batteries was to take place in the United States.
China was importing the raw materials to manufacture the steel and composite parts, and then was shipping those parts to Ireland for assembly and the completed car was then being shipped back to California. The cost model worked for competitive reasons in 2007.
Today those shipping costs of moving the car once around the world in assembly no longer make sense.
More manufacturers who moved their plants from Mexico to the far east are discovering that any savings they had in those moves have disappeared with the oil increases. Mexico and North America are regaining their competitive edge for some manufactured products. Transportation costs are bringing manufacturing plants closer to North America Again.
Major retailers like Wal-Mart, Sears, and Target are discovering that the costs of many clothes manufactured in Malaysia, India, and China are rising faster than the rate of inflation. Transportation costs now are sometimes higher than the cost of the manufactured goods.
The costs of moving a container from Shanghai to the west cost had gone from $3000 to $8000 at $100 per barrel. At $200 a barrel, it is estimated that the rate would move to $15,000. Those transportation costs are worrying governments in the far east. Governments in Europe are welcoming those prices as manufacturing jobs are being created in Eastern Europe.
Most electronics find their way to North America aboard jumbo freight jets. Although we continue to see the costs of many computers and electronic gadget prices declining, the costs of moving those goods are also being affected by soaring fuel prices.
And some of that manufacturing is being relocated back to Mexico.
If you’ve spent any time in the super market recently, you will notice that many of the items are more expensive than a year ago. That too is a result of increasing transportation costs to bring those products from New Zealand, South America, China and Israel. Even moving potatoes across Canada is increasing their costs. In the United States the price of flour has risen by 87%, eggs by 73%, cheese by 27% and milk by 20%.
It makes local grown food more attractive. Potatoes, onions, carrots, cabbage, brocolli, cauliflower, beans, and squash because it won’t have to travel as far will be both a bargain and fresher than anything imported into the region. Mother nature has provided an abundance of blue berries this year that are sweeter and tastier than super market varieties.
We may even begin choosing pears, apples and peaches from either British Columbia or southern Ontario.

–Jim Cumming,
Publisher