Billionaire supermarket owner breaks down why higher oil prices leads to price hikes for food
John Catsimatidis, the billionaire owner and CEO of New York City supermarket chain Gristedes, argues higher prices will stick around until at least the middle of next year.
John Catsimatidis, the billionaire owner and CEO of New York City supermarket chain Gristedes, warned that higher prices for things like food and gas will stick around "at least until mid-2022."
Catsimatidis made the prediction speaking with FOX Business’ Neil Cavuto during the FOX Business special "Inflation in America" on Wednesday, shortly after it was revealed that U.S. consumer prices last month accelerated at their fastest annual pace in 13 years.
Catsimatidis told Cavuto that inflation is really "a tax on the poor and a tax on the middle class because when corporations are going to be taxed and they pass it down to the stores, guess what? They’re going to raise the prices."
"They will either raise the prices or go bankrupt," he added.
The Consumer Price Index rose 5.4% year over year in September, according to the Labor Department, matching the July reading for the hottest print since 2008. Prices increased 0.4% month over month.
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Analysts surveyed by Refinitiv were expecting prices to rise 5.3% annually and 0.3% in September.
Food prices jumped 0.9% last month and are now up 4.6% annually, according to the index. The price for meats, poultry, fish and eggs soared 10.5% this year, while beef prices climbed a whopping 17.6%. Fruits and vegetables rose by 3%.
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Catsimatidis noted that companies are faced with higher input costs and that leads to higher prices at the grocery store.
He stressed that companies "don’t want to have a bad quarter" so they are passing along their higher costs to the consumer.
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Americans are also dealing with soaring costs for energy, which climbed 1.3% in September and is now up 24.8% over the past year, according to the Consumer Price Index released on Wednesday.
For Americans earning the median annual income of about $70,000, inflation has forced them to spend an extra $175 a month on food, gas and housing, the New York Post reported last week, citing Mark Zandi, the chief economist at Moody’s Analytics.
Catsimatidis, who is also the CEO of United Refining, argued that the higher prices Americans are seeing for gas "started the first week Biden was in office and he kills the pipeline."
In a series of orders aimed at combating climate change, President Biden temporarily suspended the issuance of oil and gas permits on federal lands and waters and canceled the Keystone XL oil pipeline project.
President Biden revoked the permit for the 1,700-mile pipeline on his first day in office, ending a project that was expected to employ more than 11,000 Americans this year.
Catsimatidis pointed out that under former President Trump America was producing more oil every day, compared to now.
He noted that the price of oil went from about $40 dollars a barrel to about $80 dollars a barrel since President Biden has been in office.
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On Wednesday, West Texas Intermediate crude oil slid 71 cents to $79.93 a barrel.
"Don’t kill America," Catsimatidis said on Wednesday, arguing that the dominant player in the oil industry is now Russia.
"We turned it over to the Russians," he said.
Gas prices have jumped across the nation, leaving only six states with prices under $3 per gallon as of Tuesday.
The national average stood at $3.29 on Wednesday, slightly higher from the day before and $1.11 more than the same time last year, according to AAA.
"The key driver for this recent rise in the price of gas is crude oil, which typically accounts for between 50% and 60% of the price at the pump," Andrew Gross, a AAA spokesperson, said. "And last week’s decision by OPEC and its oil-producing allies to not increase production further only exacerbated the upward momentum for crude oil prices."
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On Wednesday, Brent crude fell to $82.79 a barrel. Two days earlier, the global oil benchmark, reached $84.60, its highest since October 2018.
Catsimatidis stressed that when "crude oil goes from $40 to $80 dollars a barrel and the United States reduced production and we’re getting screwed up in Canada with the pipeline situation, not getting our crude oil from Canada, what happens? The price went up to $80 dollars a barrel and we’re paying [Russian President Vladimir] Putin and we’re paying OPEC $80 dollars a barrel for the crude oil."
He then explained that the increased price for oil leads to higher prices for food because "everything is delivered to the grocery stores by truck."
Catsimatidis added that the price hikes from manufacturers are also a result of higher costs for labor, a shortage of truck drivers, as well as other increased input costs.
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FOX Business’ Jonathan Garber contributed to this report.
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