Bottled water is one of the best examples of energy waste and environmental pollution. Mayor Newsom in San Francisco encouraged restaurants to ban the service of bottled water. Few complied. If consumers were more aware, the US could easily waste much less.
Let's analyze that cost in detail.
A case of water with MSRP of $4.00 at retail might cost $1.00 at wholesale. Let's compute the fuel cost to move the water from Reno to San Francisco.
- A container holds 1,440 cases of bottled water.
Shipment Description
| Commercial Freight Listing Information |
|
From Wikipedia: A highway trailor combination, pulling a 53 foot trailor, with a full legal load, and equipped with a commercial diesel engine of 300 to 400 hp, will get about 5 to 6 miles to the US gallon of diesel fuel, less in the mountains.
- The container travels 200 miles, a distance from Reno to San Francisco; or from Bakersfield to Los Angeles - and consumes 40 gallons of diesel. It consumes another 40 gallons as the container is distributed from the warehouse to retail stores.
- At $5 per gallon, that's $400 of gasoline or equivalent.
- Spread over 1,440 cases, the gasoline cost $0.28 per case.
- Add the energy cost of making the bottles, filtering, bottling, and loading trucks, energy costs are over 30%. It's the largest non-labor expense - more than water, chemicals, filters, plastic, and depreciation.
- For the environment, don't forget the energy cost to dispose and recycle the plastic bottle.
| Gasoline and Diesel Fuel Update | ||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crude oil prices have dropped more than 50% from it's height. Wholesale prices of gasoline have dropped and retail is sl0wly dropping. At 50% lower gasoline costs, producers save $0.14 per case; and shaves $0.56 from the MSRP - a 14% savings. We should see this savings soon in grocery stores.
If oil dropped another 50%, the savings is $0.07 per case - which would have a less significant impact on the retail price. This is the non-linear impact of price change that we first observed at MIT in 1972. No other historic data has been available to substantiate the non-linear impact of large price changes until recent history. Even with two data points, the fitted curve may still be statistically inaccurate.
It is sufficient warning that dependence on imported oil endangers the stability of our economy - all developed economies.
If we eliminated bottled water, we'd save even more - for ourselves, our nation, and our environment.
Conclusion
Generally, the price of every product and service is impacted by high energy costs. Products that are bulky and travel a long distance are more adversely affected. Conversely, when oil prices drop, MSRP should also drop significantly.
In time, the 50% oil price drop stimulates the US economy dramatically - a fact that many 'chicken little' pundits have overlooked.
Posts
