As diesel fuel costs loom near a U.S. average of $4 per gallon, transportation costs are beginning to increase the price of transporting goods, such as food products, to their destinations.
However, according to Randy Lait, University Dining business officer, the increase in fuel costs has not affected the University's cost of food as much as the production of ethanol has.
Alternatives also burn bucks While substituting ethanol as a alternative fuel to diesel and gasoline has become a more viable, less costly option, it may not be the answer to diesel-fueled inflation, according to Lait.
"The conversion of corn, which was going into food for animals, is being diverted into ethanol production," Lait said. "Things like beef and chicken, pork, oils, like frying oils and eggs are going up [in price]."
Lait said that eggs have experienced the largest increase in price.
"The eggs are up to $22 a case; they were something like $7 a case not too long ago," he said.
Despite the fact that creating clean energy sources, such as ethanol, are also increasing the price of food products, Brad Sturgill, doctoral student and lecturer in economics, said alternative fuel sources will truly be the only way to lower fuel costs.
"If there is an alternative, and if that alternative is relatively cheap and feasible, then the demand for gas would fall and that would help to lower the price," Sturgill said. "As long as things stay the way they are right now and we don't develop that energy, then you can expect the price of gas to stay pretty high."
Diesel could fuel inflation While Lait said that the cost of food is growing because of the increased price for diesel gasoline, the University is protected from any fuel surcharges through a contract with the main grocery supplier to the dining halls.
"Our contracts for our grocery buying are going to help protect the University from the straight diesel fuel increase," Lait said. "Now some things will go up because we don't have that [type of contract] with every single company."
As a result of the increase in food cost, Lait said University Dining is not planning to raise dining hall prices right away because they have a choice in what products they purchase, but they will be looking at places where food is purchased individually, such as in the C-Stores or on-campus fast food chains like Chick-Fil-A.
"With the Chick-Fil-A, we have to use the Chick-Fil-A chicken and the Chick-Fil-A frying oil, and we charge what Chick-Fil-A says we need to charge for," Lait said.
Michael Sanchez, freshman in chemical engineering, said he luckily uses his meal plan for most of his meal purchases.
"It's going to make me not want to buy from there anymore," Sanchez said of the possible price increases for C-Stores and on-campus fast food chains.
According to Sturgill, the large increases in diesel fuel prices are because of a high demand for oil in China and the Organization of the Petroleum Exporting Countries' market power of the oil supply.
While rising diesel gasoline prices have yet to create a major effect on University food costs, they will definitely affect costs of products in local grocery stores, according to Brad Sturgill.
"At some point, as long as the price of diesel fuel continues to rise and it's a relatively large increase, then we will definitely see increases in the price of consumer goods that are being transported by [diesel-fueled trucks]," Sturgill said.
However, Sturgill added that he does not know how soon the increase in consumer goods prices will occur. The rise in cost will be dependent on the magnitude of the increase in diesel fuel prices and how long the increase is sustained, he said.
Sanchez said he is glad he chose to live on campus next year so he won't have to "worry about the price increases in grocery stores."
End of the road not likely in sight
Both Lait and Sturgill were unsure of when the diesel fuel costs would begin to stagnate.
"Globally, the cost of food is going up," Lait said. "We'll see prices rise and stay up for quite awhile."
On the other hand, Sturgill said the length of time that diesel prices increase depends on what OPEC does and how things in the Middle East transpire, as well as China's rate of growth.
"If China's economic growth rate continues to increase at the rate it is right now, then we would expect to see the price of gasoline to continue to rise," Sturgill said.
