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Pain at the Pump and Pain at the Check Out Line


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Energy: The effect of restricting domestic oil production isn't limited to gas prices. Petroleum is used to make or move everything we buy. So a higher price amounts to an unconscionable tax on middle and working classes.

Pump prices are now more than $2 higher than they were when President Obama took office. For a middle-class family that fills up, say, two cars with 15-gallon gas tanks each week, that amounts to an extra $3,100 a year — no small expense.

But it's not just the price of filling up the family cars that's getting harder to afford. From the clothes on your back to the shoes on your feet to that backpack for junior, rising oil prices made worse by restricted domestic supply have affected the cost of far more things than we realize.

When the railroads and trucks that deliver food to the supermarket pay more for diesel fuel, the added cost shows up when you pay for your groceries at checkout. Look in your closet and you'll find clothing made from petroleum-based fibers, including rayon, nylon and polyester. Look beneath your feet and you'll see petroleum-based carpeting and flooring.

Petroleum is used in agriculture to make fertilizers and pesticides, to run the tractors, threshers and other farm equipment used to raise our food. That food must also be transported via fossil fuel-consuming trucks and trains.

The average retail price for one pound of 100% ground beef was $2.36 in January 2009 — the month Obama was sworn in as president. As of last December, that price had risen to $2.92 — a 23.7% increase. One pound of sliced bacon in January 2009 was $3.73, but by December 2011 it had climbed to $4.55, an increase of 22%. A half-gallon of ice cream cost $4.44 in January 2009; in December it was $5.25, up 19.1%.

The push to get us off our "addiction" to oil through the increased use of biofuels such as corn-based ethanol raises food prices even further by increasing demand for agricultural commodities. Substituting food for oil in our gas tanks has only compounded the problem and raised food prices even more.

Few people have heard of the everyday price index (EPI). Unlike the consumer price index (CPI), which measures big-ticket items such as houses, cars and appliances as well as everyday goods, the EPI, a proprietary index developed by the American Institute for Economic Research (AIER), focuses on the prices of things people buy regularly, if not daily.

The AIER focuses on Americans' typical daily purchases — food, gasoline, child care, prescription drugs, phone and TV service, plus other household products. Over the past year, the EPI is up just over 8%.

The biggest factors: motor fuel and transportation costs that are up 21.1% from a year ago. The CPI, by contrast, is up 2.7%.

Food, prescription drugs and tobacco — at 3.6%, 4.2% and 3.4%, respectively — have also increased faster than the government's inflation measure. The increase in the EPI accelerated to 1.9% in March (roughly 22.8% on an annualized basis), more than double the CPI increase of just 0.8%.

Petroleum also affects our national security. The U.S. military spent more than $15.2 billion on energy in 2010, making the Defense Department one of the largest, biggest-spending consumers of fuel and electricity in the country, if not the world.

It takes 1.2 billion gallons of fuel a year to power America's fleet of naval ships, at a cost of $5 billion. "With the volatility of oil prices, our costs fluctuate by a billion dollars," says Cmdr. James Goudreau, director of the Navy Energy Coordination Office.

The rising price of petroleum and its rippling effect on almost everything we buy is a hidden tax increase on the middle class and the working poor — indeed, on everyone and everything.