The Hidden Cost of High Oil

Unless you hold shares in some of the major oil companies, and even if you do, you might not be overjoyed at the recent high oil prices.

Yet high does more than provoke groans at the pump. It drives prices of lots of things, even your morning cup of joe, and contributes to inflation across the board.

Consumers will start to feel the pinch soon in commodities such as heating oil, diesel and jet fuel.

Tim Evans, an energy analyst at Citigroup, told the Associated Press the problem lies with finding products that do not have an "energy component."

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Many price increases will come in products you may rarely associate with oil, such as products which are derived petroleum itself. This includes plastic and some fertilizers.

"Even the cheap, flimsy plastic caps for the top of our coffee cups will rise in cost," Evans said.

Food is likely to become more expensive, too.

That’s because most products, including food, are shipped on trucks via the interstate and highways, driving up shipping costs.

Evans said consumers should be ready to see hikes on airline tickets from fuel surcharges, more expensive package delivery costs or even another increase in first-class mail. Some airlines have already started passing the higher fuel costs to their passengers.

Investment guru Jim Rogers told Fortune that he predicts even your clothing will start to cost more. Oil-based synthetics are now used to make clothing. As a result, demand for natural fibers such as cotton will rise, too, Rogers predicts.

The good news is that economists say that consumers now spend less of their money on oil than previous decades because of increase energy efficiency, which means that high oil prices alone are not likely to cause a recession.

"The percentage (of personal income spent on energy) was far higher in 1979-80 than it is now," Kay Smith, a macroeconomist at the Energy Information Administration, told the AP.

However, the Energy Department has estimated that heating oil will cost 33 percent this winter.

"So far, consumers have done an amazing job of ignoring high oil prices, not to mention falling home prices," said David Wyss, chief economist at Standard & Poor's.

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