In today’s business section of the Hawaii Tribune-Herald, the article “More to Ship” announces that “Matson is hiking surcharge further.”

Last month, Matson announced that on December 2 it was raising its fuel surcharge from 24 percent to 26 percent. But due to rising oil prices, Matson now says it will instead raise the fuel surcharge to 29 percent on December 14.

This is the single largest fuel surcharge hike since 1999. And the article says that the company may consider another rate increase in Jaunary if fuel prices stay at the same levels—which I think they will.

The article goes on to say that a 20-pound bag of rice will cost 3.9 cents more, a head of lettuce one cent more and an 8 ft. 2X4 will cost 2.7 cents more. This gives the impression that the surcharge is only a minor cost increase.

But Paul Brewbaker, Senior Vice President at Bank of Hawaii, added some perspective to the discussion. He said, “The cost of oil has gone up from $50 to nearly $100 per barrel over the last year….It’s too simple to say that the fuel surcharge will lead to higher prices at the supermarket…It may be more expensive to transport lumber, but it may also be that lumber is more expensive.”

I’m glad he mentioned that. We grow lettuce and we know that the cost of bringing a head of lettuce to the local supermarket is affected by oil prices from the very beginning to the very end. Fertilizer, cultivation, chemical, irrigation, cooling, packaging and transportation all uses, or is made from, oil.

For example, lettuce must be grown to get seeds. So as oil prices rise, seed costs rise. Similarly, the cost to grow that head of lettuce will rise with escalating oil prices. Costs all along the way, such as of cooling the lettuce and hauling it by truck to the docks, are influenced by rising oil costs.

The Matson transportation to Hawai‘i may cost only one cent more per head of lettuce. But hauling that head of lettuce from the dock to the wholesaler’s cooler, and further hauling to the store, all cost more as oil prices rise. Then the store lights and refrigeration costs go up as oil prices rise, too.

So as Paul Brewbaker points out, “It’s too simple to say that the fuel surcharge will lead to higher prices at the supermarket.” Lots of these costs take a little time to work their way through the system. But they will.

That’s what I was talking about when I wrote the blog post Frog in the Pot.