Food Professor: Here's why a spike in the price of oil will impact your grocery bill

J4R in for Joanne Vrakis this week. She's taken a little bit of a spring break. She'll

be back next week. For now, you're stuck with me, folks. So over the next two days, glad

to be with you. Canadians are already stretched thin at the grocery store. We all know that.

The escalating conflict in Iran could make things worse, apparently, with oil prices climbing

and the street of hormones under threat. The ripple effects don't stop at the gas pump.

The entire food supply chain runs on energy, and when fuels get expensive, so does everything

in your card, apparently. But I don't know nothing about this. It's the food professor

himself who's going to explain it. Sylvie Charlebois joins us this morning. Good morning, sir.

Hey, good morning, Jake. Thank you so much. So is the connection oil and the spike in energy

prices that's making its way to the grocery shelf? Oh, absolutely. So for every 25 percent

in oil, you're likely to see the grocer bill of a typical family of four in Canada increased

by $150 to $200 for the year. And oil is up 65 percent since January 7th. And so obviously,

if prices remain elevated, we're likely going to start seeing prices increase probably end

of April early, because there's a bit of a lag. Of course, it doesn't happen like right now.

But it is problematic. I mean, the barrel of oil is now over $90. That's a 35 percent increase

in one week. We haven't seen that since 1983. So yeah, it's pretty dramatic. And of course,

for a lot of farmers in Quebec, they're having a hard time getting fertilizers. And if you

haven't really forebought your fertilizer last year, you're likely going to pay 20, 30 percent more.

And I'm thinking specially about crop farmers in Quebec. They're the ones that are most

vulnerable. So even, let's say, the war suddenly stops. Peace happens. The straight-of-hermos

opens again. Transport gets back to the normal. We're still going to feel the effects from it,

considering the lag, correct? Actually, no. I think we're still, we need to,

prices would need to be remained elevated for at least, I'd say, four or five weeks.

And the straight would have to be close for about four or five weeks. But if it opens up again

and things calm down within the next week or two, we should be okay. It's just, it's when contracts

are renegotiated, when it comes to transportation and things like that. That's when we get into

trouble. And of course, you have that ripple effect impacting the entire food supply chain.

And eventually it impacts the consumers. But don't forget, Jay, on April 1st, the industrial

carbon tax. Yes, it is still there. The consumer carbon tax was brought to zero last year.

But the industrial carbon tax is still there and it's increasing from $95 a metric done to $110

a metric done. So there's going to be a bit of a double whammy when it comes to energy costs affecting

the entire food supply chain. So yeah, I mean, you know, positive thinking that anything good is

going to happen. It seems like this conflict might be in for the long run. At the same time,

when these prices do start to spike, are there specific food categories, Canadians should expect to

feel this first? Yeah, you're going to hate me even more. Because me, I would say meat dairy,

because dairy products are pretty heavy. So I tend to cost more to move things around.

And I would say fruits and vegetables. We're still in March, March, April. We're importing a lot of

food from different parts of the world, including I'd say. So I would say that those are the

categories that are most vulnerable. But I'm not surprised to see the White House trying to

see how they can implement policies, interest policies to allow cargo ships to go through the

straight of Hormuz as soon as possible. Because they know, I mean, it's not good. And the White

House is very motivated to bring down the cost of energy because if he keeps energy costs high

in the US, well, guess who's going to become less popular, President Trump, and he doesn't want that,

especially in light of the fact that we have midterm, midterms in the fall.

Yeah, and this war has not helped out as popularity either. It seems most Americans seem to be

against it. You mentioned the supply chain. So I mean, it's at risk. I would guess Canadian imports.

It goes beyond just the energy costs, I assume. There's direct import as well.

Oh, absolutely. So, but energy is the big one. A lot of people have asked me,

are we going to go through the same thing as Ukraine four years ago? Not exactly. Ukraine was

about access to grains in general, and we saw wheat. A bushel, we went up to $13 US. When

typically you would see it at $5, $6, which is what it is right now. And 20% of all calories

consume on earth has something to do with wheat. So, the Ukrainian invasion was really terrible for

food inflation. This time around, it's all about the cost to move things around. The good news

is the gain dollar. The gain dollar has actually gone up, and that's going to help importers,

the buying power of importers. So they'll have more money to spend, and they'll be able to buy more

for less with a higher gain dollar because, well, our petrol dollar is still indeed a petrol dollar.

You mentioned that we'll start feeling the effects maybe in late April and into May.

You're talking about direct consumer effects at that point, when it's already passed on from

the retailer. So, in that time, what kind of advice can we give Canadians? Anything practical

people can do to protect their budget at this point, as the conflict drags on, which we see

as well. Well, I mean, consumers are pretty strategic now. It's already in place because of the

recent inflation. I mean, inflation is at 7.3% right now. People are approaching grocery shopping

very differently than, say, a couple of years ago. My only advice is just to continue to do what

you're doing. And I'll be shy to visit independent stores in Montreal and elsewhere because

smaller doesn't mean more expensive. And I've spoken to Joanne many times about this and

valuing independent grocers is very important because a lot of people think, well, if you go to a

big box store, you're going to save more, not necessarily. There's a lot of independence out there

in Montreal and in the region that offers really good deals. Great advice. So, the good news is,

Professor Charlotte, well, I'm not mad at you. I don't hate you. I may be a little mad at you

about the whole meat thing. Maybe that just about. I know. I know. But hey, listen, there's always some

deals somewhere out there. Just be careful. Sound advice. Thanks so much for your insight this morning.

Thank you, Jay. Have a good one. That was Professor Sylvie Charlotte. Coming up,

Christine Long joins us with our Weekend Review.

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