March 9

3/9 – War in the Middle East is never pretty for energy prices. Crude oil futures, which spent Jan/Feb in the $50s, are now over $90 per barrel. AAA says the U.S. average for regular gas has jumped from $2.90 to $3.41 per gallon over the past month; diesel from $3.65 to $4.51. The country is not in danger regarding oil supplies. We now get just 10% of our oil imports from Middle Eastern countries, down from a high of 60% in 2005. You can thank the domestic fracking boom, plus imports from Canada and Mexico. And the U.S. is exporting over 4M barrels a day of crude oil, which could be redirected domestically if prices get high enough. The problem is that oil is an international market, and supply risk is different from price risk. The U.S. economy has been in a delicate balance regarding jobs, inflation, and GDP growth. Energy prices will tilt that balance toward higher inflation, likely resulting in fewer jobs and slower economic growth.