When $100 Oil Was Normal… and Why “Lower Prices” Still Feel Like a Crisis

[Luis Gonzalez]

When $100 Oil Was Normal… and Why “Lower Prices” Still Feel Like a Crisis[

How inflation, liquidity expansion, and structural energy shifts changed the real cost of gasoline in America.

The Last Wire

We are in a strange economic moment where prices may fall on paper, but most people do not feel it in real life.

Energy markets ease, headlines talk about relief, yet everyday costs remain stubbornly high.

Gas, groceries, shipping, and manufacturing do not move in isolation. When energy costs rise, they ripple through the entire economy. And when they fall, that system does not fully unwind. It resets higher and keeps going.

That is the part most people sense but rarely see explained clearly:

We are not returning to a lower-cost world. We are operating inside a higher-cost baseline that has already been established.

So even “lower” prices can still feel expensive, because the starting point has shifted.

This is not just volatility anymore. It is structural change in how costs flow through the economy.

— Gonzo

Read the full article at: The Last Wire

[Canuck Conservative]

Oil was at $60-70/bbl. before Feb. 28th

This Iran Operation is the only reason why oil is over $100

[Luis Gonzalez]

Oil was at $60-70/bbl. before Feb. 28th

This Iran Operation is the only reason why oil is over $100

My article argues otherwise.

Thanks for the reply.

[Free Vulcan]

The direct linkage of energy price to goods price is not a strong as it used to be in this environment due to outside factors driving inflation.

One is the huge illegal surge competing for goods here and driving up prices. Articles posted here have detailed that.

So many goods are now produced overseas that the US has far less pricing power in either direction.

One factor not talked about much is consumer demand. There was a discussion of this on another thread awhile back. Younger consumers are not like the older generations. In the day if beef was too expensive, you switched to pork, then chicken, turkey, fish - whatever you could get your hands on.

The younger generations want what they want, when and how they want it, and they want it now. They don't care what it costs. As a result demand doesn't fall off so much when prices rise, and the consequence of that is prices don't fall as they used too when it does. And so they stay high.

Generous welfare is not helping. You don't have to budget so much when the govt give you ridiculous amounts of food money that you can nearly buy what you please.

And the big regulatory increases during Biden are now in the system and are also helping to push prices higher.

I'm sure there's more, but that's what comes to mind up front.

Add: Not only illegals, but with over half on welfare, it becomes an inflationary double whammy.

[Weird Tolkienish Figure]

Oil was at $60-70/bbl. before Feb. 28th

This Iran Operation is the only reason why oil is over $100

You are correct.

[IsailedawayfromFR]

I enjoyed reading your article wherein you detailed why gasoline is not all that high at all in real terms.

Pricing of gasoline is very visible as everyone feels it at the pump when one fills up.  I for one find myself unconsciously monitoring stations as I drive by every time I am out.  It is psychological.

What should worry people more than gasoline is the more hidden cost of electricity which impacts far more than transportation costs.  These cause real rise in costs to everyone and they have been dramatic.  Although the price of natural gas is part of this, natural gas prices now in real terms are as low as they have been in decades.

The reason power costs have extraordinarily risen is not the cost of hydrocarbons, but the foolish quest this country has undertaken to limit the truly lower cost(and more reliable) source feedstock of natural gas, coal and nuclear(and even hydro on the West Coast) and make more dependence upon wind and solar(notoriously unreliable).  These cannot compete on $/kwh with the $kwh using lower cost feedstock, but are thrust upon us with a manufactured desire to "save the planet" rather than common sense. 

We will soon pay the piper for this malfeasance as data centers for AI hungrily scarf up even more power.

https://www.electricchoice.com/electricity-prices-by-state/historical/

[Cyber Liberty]

You are correct.

I suggest you read Luis's article.  He's a good and informative writer....

[Free Vulcan]

The reason power costs have extraordinarily risen is not the cost of hydrocarbons, but the foolish quest this country has undertaken to limit the truly lower cost(and more reliable) source feedstock of natural gas, coal and nuclear(and even hydro on the West Coast) and make more dependence upon wind and solar(notoriously unreliable).  These cannot compete on $/kwh with the $kwh using lower cost feedstock, but are thrust upon us with a manufactured desire to "save the planet" rather than common sense. 

Yes. We have seen that directly here in Iowa as Alliant has continually raised rates because of alt-energy boondoggles. Not only does it crush consumers, but guts the financials of industry, especially older ones maybe not as efficient as a new cutting edge facility.

[Luis Gonzalez]

I suggest you read Luis's article.  He's a good and informative writer....

Thank you brother. 

I write these articles to challenge my own preconceived notions.

It works sometimes.

[Bigun]

I enjoyed reading your article wherein you detailed why gasoline is not all that high at all in real terms.

Pricing of gasoline is very visible as everyone feels it at the pump when one fills up.  I for one find myself unconsciously monitoring stations as I drive by every time I am out.  It is psychological.

What should worry people more than gasoline is the more hidden cost of electricity which impacts far more than transportation costs.  These cause real rise in costs to everyone and they have been dramatic.  Although the price of natural gas is part of this, natural gas prices now in real terms are as low as they have been in decades.

The reason power costs have extraordinarily risen is not the cost of hydrocarbons, but the foolish quest this country has undertaken to limit the truly lower cost(and more reliable) source feedstock of natural gas, coal and nuclear(and even hydro on the West Coast) and make more dependence upon wind and solar(notoriously unreliable).  These cannot compete on $/kwh with the $kwh using lower cost feedstock, but are thrust upon us with a manufactured desire to "save the planet" rather than common sense. 

We will soon pay the piper for this malfeasance as data centers for AI hungrily scarf up even more power.

https://www.electricchoice.com/electricity-prices-by-state/historical/

  Spot on!

[Luis Gonzalez]

I enjoyed reading your article wherein you detailed why gasoline is not all that high at all in real terms.

Pricing of gasoline is very visible as everyone feels it at the pump when one fills up.  I for one find myself unconsciously monitoring stations as I drive by every time I am out.  It is psychological.

What should worry people more than gasoline is the more hidden cost of electricity which impacts far more than transportation costs.  These cause real rise in costs to everyone and they have been dramatic.  Although the price of natural gas is part of this, natural gas prices now in real terms are as low as they have been in decades.

The reason power costs have extraordinarily risen is not the cost of hydrocarbons, but the foolish quest this country has undertaken to limit the truly lower cost(and more reliable) source feedstock of natural gas, coal and nuclear(and even hydro on the West Coast) and make more dependence upon wind and solar(notoriously unreliable).  These cannot compete on $/kwh with the $kwh using lower cost feedstock, but are thrust upon us with a manufactured desire to "save the planet" rather than common sense. 

We will soon pay the piper for this malfeasance as data centers for AI hungrily scarf up even more power.

https://www.electricchoice.com/electricity-prices-by-state/historical/

Great response. Thanks!

This entire debate can be boiled down to one simple principle. We devaluated the dollar, so, everyone wanted more dollars than the last time, and we absorbed the loss.