Price of Stamps Going Up Again

The United States Postal Service(USPS) is planning a "forever" stamp for letters, which would be good no matter how many times postal rates increase. The "forever" stamp was recommended Monday by the independent Postal Regulatory Commission. The Commission also called for a 2-cent hike in the price of first-class rates which would increase the stamps to 41 cents. This increase would be a penny less than the USPS had originally sought.

This forever stamp wouldn't carry a denomination, but it's price would be the same as whatever the first class stamp costs at the time. For instance, if the first class stamp increases to 41-cents, the forever stamp would also cost 41 cents. There would no longer be a need for one and two cent stamps because even if the price of stamps were to increase, forever stamps purchased prior to an increase would still be valid. Buy a roll of forever stamps and they will be valid, well, forever. For those who think they will be able to stock up on forever stamps, know that the Postal Service is likely to limit the amount of forever stamps you can purchase at one time. Commission chairman of the Postal Service, Dan Blair says that the adoption of this current proposal would be good for the Postal Service as well as its customers and the postal system as a whole.

First class stamps are currently 39 cents and first class mail is 39 cents for the first ounce and 24 cents for each additional ounce. Under the proposal, the first ounce would increase to 41 cents but each additional ounce would just be 17 cents. When you add up the numbers, you will actually be saving a few cents when you mail letters that are greater than one ounce. The current proposal also recommended an increase in the cost of mailing a post card to 26 cents, which is 2 cents more than the current rate but a penny less than what the Postal Service initially sought.

The reason the rate proposals were scaled back is because the higher rates proposed b y the Postal Office would have raised more income than what would have been necessary for the postal service to break even in 2008. Other rate increases were also included in the proposal but as of yet, nothing has been finalized. The proposal will go back to the board of governors of the Postal Service who will either accept the proposed recommendations or as for a reconsideration. If they decide to accept the proposed recommendations as is, the rate increases could take effect as soon as May of this year.

The Postal service applied for higher rates in May of 2006. Since that time, the commission has received many requests from witnesses and held a month long hearing on the request in developing its recommendations. Under legislations approved by Congress last year, the postal commission will develop a less unwieldy system of raising rates for future use and it also has more authority to regulate postal activity.

The last time postal rates went up was in January 2006. Postmaster General John Potter has pointed out that "the Postal Service is not immune to the cost pressures affecting every household and business in America." Unbeknownst to many of us, each penny increase in the price of a gallon of gasoline costs the Postal Service eight million dollars. The Postal Service is also dealing with health care expenses. The service has more than 260,000 mail-delivery cars and also has to keep up with the rising health care expenses of it's employees. This is one of the reasons the Postal Service has to periodically increase it's rates, in order to make up the money it losses. The Postal Service emplos 700,000 people and is funded by revenue, not taxes.

Forever stamps also pose a few possible drawbacks to the Postal Serivce. For one, strong early sales may lead to a decrease in revenue down the road. This is especially true if people go buy the stamps in large quantities when they first become available until they accumulate them so they don't have to buy them for a long time. There is also the question of why people would buy any regular first class stamps if the forever stamp is available at the same price and wouldn't be effected by rate increases. There are still more details to iron out with the proposal of the forever stamp.

Many other countries including France and Finland has already begun using this type of stamp. Many consumers believe it sounds like a good idea. After increasing rates 13 times in 32 years, the USPS will just have to wait and see if this new forever stamp sticks.