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From the Editor’s Desk: Food safety

Food safety


June 11, 2008
By Cam Wood

Topics

The impact of speculation
is quite significant in our modern lives. This morning, as I dragged my
weary carcass out of the sack, I heard that oil stocks had reached
record highs on the speculation that the per barrel cost will hit $200.

The impact of speculation is quite significant in our modern lives. This morning, as I dragged my weary carcass out of the sack, I heard that oil stocks had reached record highs on the speculation that the per barrel cost will hit $200.

Now, keep in mind, this is “speculation” based on nothing but a bunch of analysts … with a heckuva lot more dough than you and I.

The world supply of oil, tightly controlled, is not in a shortage situation. In fact, we recently learned that despite what the world powers would have you believe – especially those in power south of the border – reserves and shipments into North American refineries are doing quite well, thank you very much.

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Regardless, the speculation has pretty much driven the consumer into a cocoon mentality, which means an extremely difficult task lay ahead for the small business owner.

Last month on BusinessWeek.com , business analyst Keith Girard wrote: “In a market like this, the only actions business owners can take are raise prices, cut costs, or operate more efficiently. But small businesses operate on thinner margins than large corporations and have less leverage to negotiate product pricing, transportation, marketing, and labor costs. Because the economy is also slowing, the ability to raise prices is limited. The effects of the squeeze are evident throughout the economy, but small businesses are feeling the most pain.”

Feeling pain because of speculation … fuelled by comments like those made by American president (and oil-rich son of a…merican oil baron), George W. Bush earlier this year to the Associated Press: “It should be obvious to you all that the (gasoline) demand is outstripping supply, which causes prices to go up.”

Another BusinessWeek.com columnist and automotive expert Ed Wallace took exception this position.

“Gasoline reserves on hand are at the highest levels since the early 1990s. In fact, average gasoline reserves on hand have risen since this past October, while oil reserves in this country have gone up virtually every week this year. There’s no shortage of gasoline or oil in the U.S. today, and we have near-record reserves on hand. Meanwhile the Congressional mandate for ethanol has jacked up the price of food,” the writer stated in an April column.

Funny thing is … even the oil executives don’t buy into the specu-lation. ExxonMobile CEO Rex Tillerson told Marketwatch: “The record run in oil prices is related more to speculation and a weakening dollar than supply and demand in the market. In terms of fundamentals, fear of supply reliability is overblown.”

For us, this sinks into third spot on a triple whammy for the pizza business. We’ve endured over a decade on increasing dairy costs (despite lower overall consumption by Canadians), a global wheat “crisis” that has sent per-bag costs beyond $50, and now fuel prices pumping what little income our consumers have, and own meagre margins.

Speculation has fuelled something we don’t have to speculate about: we’re in for a long, fearful ride, and it’s not going to be cheap.