By mid-summer, a gallon of gas could cost between $4-$5-a-gallon.
It’s the law of supply and demand playing out in real time as the supply of oil gets increasingly squeezed.
With oil stockpiles low, the price per barrel is rising rapidly — and that means, higher prices at the gas pumps in the very near future.
The national average for a regular gallon of gas in already $3.045, up from $3.036 a week ago and $2.899 a month ago, according to AAA. For comparison, a gallon of have average $1.98 this time last year.
Oil markets are already rallying. I’ve predicted $75-$100 oil by summer and clearly, we’re already well on the way.
Brent crude spiked above $70 in early trading Tuesday and West Texas traded at more than $68 per barrel after OPEC+ provided its assessment of a tightening oil market.
Indeed, according to an OPEC+ report, oil stockpiles are expected fall rapidly in the second half of the year, as the economy starts to recover from the lockdowns. Not even a possible end to the Iranian sanctions will be enough to meet global oil demand.
But, it’s not just oil that’s moving higher…copper, microchips, lumber and even chicken are all escalating in price.
Does anyone see a pattern here?
Lousy Monetary and Fiscal Policy to Blame
You see, higher prices are not entirely about “transitory” supply problems as the Federal Reserve would like you to believe. Instead, higher prices are primarily a result of money is losing value. Or in this case, specifically, the U.S. dollar losing value.
Inflation is here. It’s causing the price of everything to go up. Given that oil is used in the production and transportation of any kind of consumer good, you can expect rising consumer prices to follow, including food prices (as we’ve seen in recent data.)
So, get ready. It’s up, up, and away…