Higher Gas, Seafood Prices Likely from Spill
The ripple effect from the oil disaster in the Gulf of Mexico will probably spill over into your pocketbook, in the form of higher prices for gasoline, seafood and other items, according to CBS News Business and Economics Correspondent Rebecca Jarvis.
Gas prices are up a nickel a gallon in the two weeks since the explosion that sent oil gushing out into the Gulf from the rig that eventually sank. AAA puts them at a nationwide average of $2.90.
There's always upward pressure on gas prices during the summer driving season, anyhow, Jarvis pointed out to "Early Show" co-anchor Harry Smith and, "When you factor in concerns that there may be some disruption to supply, that adds to some of the pricing pressure."
The actual amount of oil being lost each day is a miniscule percentage of worldwide or just domestic output, she adds, "but the potential loss as a result of (disrupted) shipping channels -- very important shipping channels that are vital to our U.S. production, could be the main factor that could eventually drive prices higher.
"About 30 percent of our U.S. oil production comes from the area where this spill is being affected. And on top of that, 19 percent of our refining capacity (is in) Louisiana, Alabama and Mississippi. So, if … the oil spreads out, and ships can't make it through the channel, which by the way they can right now, but if that happens, we could see a major impact on prices."
Abd that uncertainty is part of what's led to the price hikes we've already seen, Jsrvis says.
Some traders tell her we could see prices back above $4 a gallon this summer, a level we haven't seen since July 2008. Oil prices are currently 72 percent higher than they were at this time last year, and gas prices are 40 percent higher.
Special Section: Disaster in the Gulf
Gulf Oil Spill Containment Efforts
Not only that, but seafood prices are already edging up, Jarvis observes.
"Oysters (are) up about $2.50 a gallon. Crab meat has gone up a dollar. Shrimp hasn't gone up in price, but Louisiana is a huge area for the shrimp industry. Right now, the western Mississippi portion is where most of the shrimp comes from. What has been shut down as a result of this spill is the eastern Mississippi portion. So, if we see a shutdown that's larger, we can see some impact there, too."
The real wildcard for prices, Smith noted, is the possibility of the mouth of the Mississippi being cut off to shipping in an effort to keep oil from flowing up-river.
"Many things, from bananas to grains and coffee -- everything goes down that portion of the Mississippi," Jarvis agreed. "If they shut it down, or even if they just shut down a part of it, we'll see a blockage. We will see prices potentially going up as a result of the fact that (goods) just (aren't) getting through as quickly as they should be, and demand (dictates) that we want them faster than they're getting there."