As a financial advisor, I’m frequently asked, “How high will oil eventually go?” But without going to a long discussion about the relation between oil and the dollar, the impact of the Chinese diversifying out of Treasuries and into commodities, and the impact of ethanol regulation, I’ll tell you what really concerns me more than oil prices: cereal prices.
When I was five years old, Saturday was a big day in my life. I’d wake up early and put on my best play clothes to go with my mom to the Kroger supermarket, with one specific destination on my mind: the cereal aisle. Thirty years ago, the cereal isle represented all that was good about growing up in America, and to some degree, I think cereal made me what I am today, both good and bad.
On the good side, my mom taught me how to read while eating Alpha Bits, and consuming Lucky Charms sparked a lifelong interest in the financial policies of Ireland. On the bad side, I was a firm believer that I could eat as much Cookie Crisp cereal as I wanted, as long as it was fortified with essential vitamins and minerals. I also believed that Cap'n Crunch was actually in the military.
Now that I’m thirty-five, while I refuse to deny my children the abject pleasure of the cereal aisle and the wonders that it holds, I approach the cereal aisle with dread: there’s no toy surprise, the package is smaller, and the stuff is five dollars a box.
Five dollars a box? It’s like you’re paying for Kellogg’s Platinum-Frosted Flakes or Post Gold Nuts Cereal. I’m sick and tired of hearing about how “rich oil executives” are taking advantage of the American people, and having luxurious vacations at the expense of the consumer. What about the “rich cereal executives”? With the profits from five dollars a box, the Trix Rabbit could enjoy breakfast at the Ritz-Carlton.
Furthermore, the contention that the box of cereal only costs five dollars is deceptive, because it merely refers to what economists call “nominal cost.” Nominal cost simply means the price paid for the item. However, there is something much more illustrative called the “actual cost,” and I have a formula to accurately represent my actual cost per box:
Amount of cereal originally in box (minus) amount spilled on floor (plus) generic cereal my wife adds to box when children are not looking (divided by) cost of box (minus) coupons woman gives me while in line after finding out I have seven small children = actual cost.
Congress doesn’t like former Exxon CEO Lee Raymond’s executive pay package? They’ve got the wrong guy. The real culprit is Toucan Sam — maybe it’s time we put him before Congress and demand that all cereal profits go toward researching why cereal can’t stay crunchy until the last spoonful.
Maybe I should give the cereal executives a break — maybe it’s not their fault that cereal is so expensive, and it’s certainly not their fault that my children spill so much cereal on the floor. Maybe it’s just that everything is more expensive due to the falling dollar — milk, Italian suits, MP3 players, macadamia nuts, and so on. I guess I just want my allotted time to complain.
Because whatever the reason for high prices, one thing is becoming increasingly clear: As the father of seven children, it’s not the price of oil that will sink me — it’s the price of cereal.
(Note to cereal executives: if I’m not concerned with the 40 grams of sugar in each bowl of cereal, why would I care about the extra fiber?)
© Copyright 2006 Catholic Exchange
John Clark is a Registered Investment Advisor and a nationally-recognized expert in the field of ethically responsible investing. You may email him questions for this column at jclark@lasalle-st.com or call him directly at 1-888-764-2423.
