In our house we have a pick up truck, a Jeep Patriot, a sedan and a Winnebago RV.
So two days ago, we decided in light of Putin's Russian invasion of Ukraine it was time to fill all of our vehicles up with gas, and to buy more "staples" for long term grocery price increases.
Prices in our area of the Southwest (New Mexico and Texas) have hovered from $3.25 per gallon of gas to $3.85. Already we are seeing them creep up. And we may as well get ready because $4.00 per gallon will arrive any day and then $4.50 and higher still. We have noticed that food prices in grocery stores already are up 18% to 20%, and higher for many items. Welcome to the new times of inflation, post Covid price hikes, break down of world wide infrastructure of shipping and delivery, and war.
Take a look at some of today's reporting.
KIPPLINGER: "There's more pain at the pump ahead as gasoline prices keep climbing" (our comment: The national average price of regular unleaded hit $3.53 per gallon up a nickel from last week and about a dollar from last year. Gas will hit $4.00 this year (it already has in some places). Diesel is also up, $3.94 and heading for $4.00 soon.)
NPR: "Oil prices are surging toward $100 a barrel. Here's what that means to you..." (our comments: NPR goes on to point out that prices at the pump for gas, and diesel will go up and that will impact the prices for all kinds OF goods, supplies, food, you name it.
At our house we have 3 vehicles and an RV. So we spent yesterday taking them all to our local gas station and filling each up to the brim.
We were right. Reports of oil, gas and diesel prices going up are filling the world press.
But there are other factors behind the oil price surge
It's not just the prospect of war in Ukraine. It is uncertainty with China, N. Korea, Iran, and a dozen smaller nations around the world, who have become more instable.
A fundamental mismatch between supply and demand was driving prices up well before the Ukrainian-Russian tensions escalated.
Demand for oil has surged since the early pandemic lows. Production, however, has not kept pace.
The oil cartel OPEC+ cut production sharply in 2020 as COVID-19 was spreading around the world, but has moved only gradually to restore output.
Furthermore, some OPEC+ members have not produced as much oil as they agreed to. Pumping oil from the ground is more complicated than flipping a switch on and off, and some producers who brought production down sharply in 2020 have found it harder than anticipated to bring output back up in 2022.
Meanwhile, publicly owned companies have been under pressure from their shareholders to deliver returns, rather than pump as much oil as possible.
And companies have done just that, meaning supply has been smaller than many observers would otherwise expect. Governments and some investors are also pressing oil companies to act more strongly on climate change, although this is widely regarded as having a much smaller impact, so far, on reduced production.
What does this mean in hard numbers? In 2020, Brent crude prices, the commonly used global benchmark, averaged less than $42 a barrel — extraordinarily low. In 2021, they averaged just under $71. Today we are seeing prices in the $80’s, 90’s and rising.
Prices have spent most of February trading in the low $90s, and even if the tensions in Ukraine de-escalated in a "best case" scenario, oil probably wouldn't go below $84 a barrel, according to a recent forecast from analysts at J.P. Morgan Chase.
But, we can all wait and see. Will Putin and Russia continue to be aggressive and how many people must die to satisfy their urge to call Ukraine a part of the Russian family.
Sadly it is an issue that could impact all of Europe and even the USA. 4
Let’s hope that wise and good people will step forth and find ways to peace, not appeasement. We don’t need another Russian that causes war, death and disaster, killing thousands of people in the process.
I am thankful we have good, wise and stable leaders in the White House, during this confrontation with Russia. Biden has a huge challenge, but he seems to hold his own when dealing with Putin. Perhaps because the world knows, Putin is a corrupt character, and achieved great wealth at the expense of the millions of Russians who struggle financially. We all are pulling for President Biden to show wisdom and strength these days.