Latest / Markets with Megan: A Quick Financial Markets Update / 033: Pain at the Pump: Deciphering the Complex World of Commodity Markets

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033: Pain at the Pump: Deciphering the Complex World of Commodity Markets · Markets with Megan: A Quick Financial Markets Update

• 0:03
  Megan Horneman: Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:07
  Megan Horneman: Bringing you Markets With Megan, today we're going to talk a little bit about what we're seeing going on in the commodity markets, specifically in the oil market.
• 0:15
  Megan Horneman: We've had consistent pressure upper pressure on oil prices for many reasons, primarily the war between Russia and Ukraine.
• 0:23
  Megan Horneman: But last week Saudi Arabia decided to extend their production cuts by a million barrels a day for another month, so it's putting upper pressure on oil prices.
• 0:34
  Megan Horneman: We're in the peak driving season in the US, so you're seeing oil prices up more than 20% just over the past couple months.
• 0:41
  Megan Horneman: This is translating into higher gasoline prices and you're going to be feeling it at the pump.
• 0:45
  Megan Horneman: But there's one other factor that we wanted to highlight on why we're seeing gasoline prices rise, and that has to do with the excessive heat that we've had this summer.
• 0:55
  Megan Horneman: The refineries here in the US can't operate at full capacity when we have temperatures over 100 degrees, so refineries are now operating at a lower capacity.
• 1:05
  Megan Horneman: That means less gasoline making its way to the pumps and that means consumers paying more.
• 1:10
  Megan Horneman: We've seen gasoline prices up about 63 cents just this year to date.
• 1:16
  Megan Horneman: To put that in perspective what that means from an economic standpoint.
• 1:19
  Megan Horneman: It's a general rule of thumb that one-cent every in gasoline prices at the pump, that means there's about a billion dollars less annual spending power by consumers.
• 1:29
  Megan Horneman: So what we're looking at is about 63 billion dollars of less spending power consumers have this year just because of the rise we've seen here over the summer.
• 1:39
  Megan Horneman: So again we're watching other developments in the commodity markets, what that will mean for consumer spending as well as what that might mean for inflation numbers over the coming months.
• 1:47
  Megan Horneman: If you have any questions or feedback, please feel free to reach out to podcasts at verdence dot com.