As
demand outpaces supply, inflation concerns rise.
Provided by Taylor McClish
On July 6, oil
prices reached a six-year high of $76.98 a barrel. This benchmark came as the
Organization of the Petroleum Exporting Countries (OPEC) and allies failed to
reach an agreement regarding an increase in production.1
This rise in
cost follows a year in which OPEC and allies cut production amidst the COVID-19
pandemic. As a surge in demand rises, production has yet to ramp up to
pre-pandemic levels. This idea of “demand being greater than supply” should
sound familiar, as we’ve seen similar economic trends in everything from
semiconductors to lumber and cars.
Earlier this
year, we saw a spike in gas prices across the country. In fact, gas prices have
risen 40 percent since the beginning of January. In addition, as the cost of
oil remains high, gas prices are continuing to be impacted, with experts
predicting prices to continue creeping up 10 or 20 cents by the end of August.1
However, despite
an increase in cost, demand for gasoline continues to rise. We’re currently
seeing a demand of about 9.1 million barrels per day, compared to 8.5 million
barrels per day at this time last year.
It can be
tempting to think that higher prices for gas and food are simply a precursor to
higher prices in general. However, if history is any indication, this is not
always the case. If you have any questions or concerns, please let us know.
Inflation touches our lives in different ways, and we would welcome the chance
to hear about your experience with higher prices.
Taylor McClish may be reached at (503) 239-3060 or Taylor.McClish@cunamutual.com
Oregonians Financial Planning Website
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Sources
1. AAA.com, 2021
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