How Record High Gas Prices Could Affect Markets


Some experts have predicted we could see another 100% increase in gas prices. How might such a substantial rocketing of such an essential part of everyday life and business impact the markets and investors?

Gas Price Forecasts

Analysts expect that gas prices could double in the weeks ahead. That would push them to all new historic highs. Far, far more than we’ve seen before.

National averages could potentially hit $7 according to some predictions. Up from just in the $3 range in February 2022. Though some parts of California have already been seeing nearly $8 a gallon since 2021.

Trading Economics predicts we could see a nosedive in gas prices within the next few weeks, back down to the mid $2 range. Though various factors, including the Russia and Ukraine situation seem unlikely to support that.

So, what might even $5 to $16 a gallon gas mean?

Compounding Inflation Trends

Even a 50% lift in gas prices is on top of similar increases last year.

That is on top of similar inflation across everything from raw materials, like lumber which is already up 100%, to insurances which have also been increasing by around 30%, and everyday items.

Gas prices impact everything from manufacturing and production to getting inventory to warehouses and retail stores, to end delivery and operations. It could easily mean compounding recent inflation trends, and multiplying the impact.

It is also worth noting that the previous high for gas according to the US Energy Information Administration came just a few months before the 2008 financial crisis.

Compounding Supply Chain Issues

Since gas is still the primary fuel for moving things, a huge spike in gas prices could certainly impact the movement of things, from ships to trucks to automobiles.

It could be another reason for a lag on a wide variety of supplies from building materials to daily living essentials, and of course a wide variety of consumer products

Investing

Stocks and crypto have already proven not to be handling the situation well, or predictably. Even precious metals haven’t behaved as many investors would expect.

These are certainly driving factors for why so many individuals and institutional investors are committing billions to real estate markets. They crave the downside protection, hard collateral, and consistent cash flow.

It is also well known that in the right price ranges, rental housing can benefit from upswings in the economy, as well as being recession resistant and experiencing more demand during financial crunches. Which many households will certainly face if prices keep on rising.

Success in this area may still heavily rely on the right connections, and relationships with contractors and suppliers due to the above potential challenges. Yet, there does undoubtedly seem to be more upside potential, with a strong foundation for investors in this space.

 


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