How is it possible that milk costs more per gallon than gasoline?

Answer 1

You should be asking the question, How is it possible that gasoline costs as much as a gallon of milk?

Answer 2

Here in Italy milk has always cost more than gasoline.
Trading in petroleum products is still cleaner and cheaper than rearing cows, due to the fact that cows eat a lot, produce a lot of - say - gross internal product, and want to be milked at 5 am: this raises the cost of human resources.
The situation is soon going to change because: (1) petrol is running out while cows reproduce; (2) most of the gas price is taxes, therefore taxes will increase; (3) research is under way to generate methane from cow emissions, and(4) the milk has so many additives that soon we will have a plastic goo with the milk as an additive.

Answer 3

1. Due to the specialized care dairy cows receive it is much more labor intensive than gasoline production.
2. Due to the necessity for refrigeration during shipping and storage that is an added cost.
3. It has a shorter shelf life.
4.Grocery stores have a much higher markup on milk than gasoline stations have on petroleum products.

Milk at the farm gate still costs less than $1.60 per gallon

Answer 4

I think milk is cheaper around here, but then, I don't have a car... for gas prices, you might want to factor in the cost of maintaining your vehicle and driving it to the station, and the fact that you'll probably use it up more quickly than you'll use a gallon of milk.

Dairy farmers, unlike oil barons and their high-powered buddies, don't have much say in what the political folks around here do. There are agreements going on to make oil production and oil import cheaper... but I'd need to know more about economics to talk about that in an educated sort of manner.

Milk is expensive to produce, and gasoline isn't nearly as delicious.

What's really disturbing is that water (bottled, I mean) is much more expensive than gasoline. Hmm. Where's Captain Planet when you need him?

Answer 5

I have zero knowledge of the oil industry…

The oil industry is an example of economies of scale. Long run average costs when producing an additional barrel of oil < the cost to produce one additional hundredweight of milk.

Additionally, farmers are price takers, so it is difficult for them to directly influence the price of milk (they try through supply management). Milk prices are a function of cheese, butter and powder prices released by the national agricultural statistical service. As these commodity prices change, so does the price of milk per hundredweight. Milk value is re-blended throughout the country based on utilization percentages by class. From there the milk value varies depending on the location.

Answer 6

Hi Uni :
Must be that consumers are gulping more milk ! ( than gasoline ).
Therefore , the government's raking in more money with every quart or gallon of milk sold .
Good information ! I didn' t realize milk was more expensive than gasoline .

Answer 7

Too bad the farmers get the smallest piece of the end price. They do the most work. I had some friends make a comment about milk prices last summer, complaining it was high, and yet they have no problem spending $3.50 on a mix drink! Doesn't make sense to me.

Answer 8

It won't pretty soon!

Although In Barrow Alaska I paid almost 8$ a Gallon that was back in the 70s.

Cost of Transporting it to the end user.

Answer 9

In this area it is because the farm lobby is "trying to protect the family farmers" by keeping prices high. Unfortunately there is no milk-drinker lobby "trying to protect the family children."

They have set "minimum" prices and prosecute any store that sells for less than those numbers.

Answer 10

Milk comes from cow. To raise cow you have to feed grain such as corn, soy beans. You know about ethanol. In US, farmers are growing corn for ethanol (to make alternate fuel for car) thanks to government subsidy. Corn and soy bean price are skyrocketing , so to feed cow cost much more. Farmers are passing on cost to consumer. You'll see cost of milk (and cheese,meat) will go up even more in 2008.