Skip to main content

Sound Advice: September 7, 2022

Gas Prices Going to $10 a Gallon?  NOT! 

Only 90 days ago, the level of hysteria surrounding the issue of inflation was overwhelming.  The Number One concern at that time was the price of gasoline, which had topped $5.00 a gallon and more than a few esteemed Wall Streeters said “You ain’t seen nothin’ yet”.

 

Surprise, surprise, the numbers then did an about-face and by late August, the national average price of gas had dropped below $3.90 a gallon.  Some of that pullback was probably attributable to releases from the Strategic Petroleum Reserve, which had been targeted at one million barrels per day since last Spring.

 

But the greater impact was from an across-the-board reduction in crude oil prices this year.  West Texas Intermediate, one of the best-known standard measures, peaked at $120.93 a barrel on June 13th, only to drop 25% 10 weeks later.  Clearly, this is not just about tapping U.S. reserves to ease price pressures.

 

According to the U.S. Energy Information Administration, the world’s production and consumption of liquid fuels is approximately in balance at the moment and likely to remain so next year.  This may be encouraging, but there will be exceptions.

 

If this forecast proves out, most petroleum products will have a further easing in prices over the year ahead.  Natural gas, however, may have an additional rise, and impact electrical producers dependent on that fuel.  What is becoming increasingly important is sourcing from renewables such as solar and wind, which accounted for 20% of electrical generation last year and may rise to 24% in 2023.    

 

 

All of this will be subject to uncertainty resulting from the conflict in Ukraine, the supply of fuel from Russia, increases in U.S. oil and natural gas production, and ongoing economic changes both here and abroad.

 

Bottom line: Electricity will become slightly more expensive, primarily due to the increased cost of natural gas, but a trip to the gas station will not require completion of financial statements before filling your tank.

 

N. Russell Wayne, CFP®

www.soundasset.com

Any questions?  Please contact me at nrwayne@soundasset.com

 

Comments

Post a Comment

Popular posts from this blog

Sound Advice: February 21, 2024

800-000-0000 That’s 800-000-0000 Again, 800-000-0000 That’s the typical closing for the hard sell commercials that are increasingly polluting media airwaves.   These are the commercials for products or services you rarely need or most definitely should avoid. A substantial number are on behalf of groups of attorneys who would have you believe that you and many others may be entitled to cash compensation for having used or being exposed to some evil item or substance some time in the last few decades.   The pitch always includes a comment that there’s no cost to you unless there is a settlement in your favor. Much of this is rubbish, but when the appeal suggests that there’s nothing to lose, why not take a shot.   And, as you would expect, “advisors” are standing by 24/7 to take your call and help get the process in motion.   What kind of advisor would be available at 3 a.m.? One version of this approach pops up every year between October 15 th and Decemb...
Post a Comment
Read more

Sound Advice: September 21, 2022

The Professional Approach To Stock Selection There are various approaches to stock selection, but the two that predominate are fundamental analysis and technical analysis.  Fundamental analysis is a numbers-based method that evaluates key factors such as income and financial health, including the past, present, and future.  Technical analysis emphasizes movements and formations of stock prices. Fundamental analysis is based on factors that over time have proved to have a meaningful impact on stock price movements.  The optimal picture of corporate profitability is steady growth, both in the past and, prospectively, in the coming years.  Steady growth is rewarded by higher valuations of underlying earning power than those accorded companies with erratic progress. When professionals screen (filter) the data of the broad universe of stocks, they look for companies that move ahead every year, regardless of the prevailing economic conditions.  Although high pas...
Post a Comment
Read more

Sound Advice: July 26, 2023

Is Day Trading a Good Idea? Day trading can be both exciting and potentially profitable, but it also comes with significant risks and challenges. Whether it's a good idea depends on several factors, including your financial situation, risk tolerance, time commitment, and knowledge of the markets. Here are some considerations to keep in mind: Risk and volatility: Day trading involves buying and selling securities within a short time frame, often within the same day. This exposes you to the inherent volatility and risks of the market. Prices can fluctuate rapidly, and unexpected events can have a significant impact on stock prices, making it challenging to consistently make profits. Time commitment: Day trading requires a substantial time commitment. It involves closely monitoring market movements, conducting research, and executing trades. It can be stressful and demanding, as you need to be actively engaged in the market during t...
Post a Comment
Read more