Broker Check
War and the Price of Gas

War and the Price of Gas

March 24, 2022

Why are gas prices so high and what will that do to the economy?

It’s a question we’ve been asked often.

While it is a complex answer, here is some basic information:

🛢️AAA puts the price of oil at about 55% of the reason behind the current price of gas. The rest of the price comes in from supply, demand, taxes, and some other factors.

 The price of oil is driven by supply, demand, and speculation. All of which were influenced by Russia’s invasion of Ukraine.

As for the second part of the question, it isn’t exactly clear how much gas prices will affect the economy.

Gasoline makes up a small portion of consumer spending – roughly 2.6% according to Reuters. That means that higher spending on gas doesn’t have a significant impact on overall consumer spending. But higher fuel prices typically mean less travel, which affects airlines, hotels, and tourism. It also makes production and shipping costs higher.

Honestly, it’s mostly a guessing game as to how much these high gas prices will affect production. At a time when shipping and transport are already backlogged no one knows what the impact will be.

Our biggest concern is how this is affecting you. Has it changed your plans or income needs? Please let us know if there is anything we can do for you.