Gasoline Is Costing Us An Arm, A Leg, And Global Stability

Inflation, war, and lingering pandemic problems are wreaking havoc on the world’s energy market. Here’s what we can do about it… March 12, 2022 [Turn on your images.]( Gasoline Is Costing Us An Arm, A Leg, And Global Stability Inflation, war, and lingering pandemic problems are wreaking havoc on the world’s energy market. Low-income Americans are feeling the most pressure as gas prices surpass record highs, but experts say the cost could rise even higher. For those of us running out of options…what can be done to offset these skyrocketing costs? Beyond inflation, Russia’s influence on the global market is another cause for concern. But how did a country with an economy smaller than that of the state of Florida manage to disrupt the entire world? --------------------------------------------------------------- [Turn Your Images On] [Road Rage: High Gas Prices Hitting Lower-Income Americans Hardest]( Shawn Ambrosino While I wouldn’t say I’ve ever lived in poverty, there were certainly a few times in my life when I’ve been very poor. When my mother first divorced my father, she and I survived on her 1970s-era bank teller’s income (with no help from dear old dad in any way). There would be nights where we would sleep downstairs in our Rochester, New York apartment because the one heat register in the house was down there. I survived on hot dogs and canned potatoes for dinner, and there were times when I had a mayonnaise or a ketchup sandwich for lunch. Though I never looked at us as poor, looking back through the lens of my adult eyes, I can see the struggles. My mom married a few years later and we were able to carve out a middle-income life that made me feel rich by comparison…but that wasn’t the only time I’ve struggled to make ends meet. When my wife and I first moved in together, we were in our early twenties and wanted to make it “on our own,” so we took pride in not asking our families for help. We survived on ramen, instant mashed potatoes, and bags of cheap frozen chicken breast that our friends would get us at Costco (we paid for it, we just didn’t have a Costco membership). However, my wife and I were also able to improve ourselves and our skills, which led to better jobs, higher salaries, and a pretty comfortable life. All that being said, I never TRULY saw “poverty” until I took a trip to Brazil in 2012 and saw with my own two eyes a woman with a house made of corrugated metal sheeting, sweeping dirt out of a home with a dirt floor while her baby played in the dirt outside. It really made me reevaluate my definition of “poor,” and I realized that even at my lowest…I had lived in comparative luxury. The Poor Pay The Ultimate Price For the past 10 years, I’ve been telling people that most Americans have never really seen “poor.” Even the homeless here in the US have it a lot better than some of the people I encountered in Brazil…but that may change soon. Inflation has gripped our nation hard for the first time in over 40 years, and consumer prices have soared because of it. Even though we’re feeling the crunch of that ugly beast everywhere, people are feeling it more at the gas pump than anywhere else. Gas today is 38% HIGHER than it was just a year ago, and those costs will only go up as we move through 2022. While you’ll see memes all over social media of people making fun of people complaining about high gas prices, the people posting them are usually wealthy enough to take the increase in stride–and some of them can even afford electric cars! But despite the online mockery, these high gas prices are hurting lower-income families the most. According to Bank of America data analytics, those soaring gas prices are "taking a bite on the lower-income consumers,” who are forced to make a decision over getting gas to get to work or cutting back on goods like clothing and furniture. Seriously, the BoA report says, “At the sector level, the lower-income group saw the biggest slowdown in clothing and furniture spending on a three-year basis, while restaurant spending remained resilient.” And while families have been forced to cut corners where they can, the research actually shows that both lower-income and higher-income households have increased their spending on gasoline as prices have surged. But of course, this is a much harder burden for lower-income households to bear. What Is The Solution? According to the BoA report, “Rising gas prices are particularly painful for lower-income consumers. For one, gas makes up a larger share of their total spending. For another, lower-income consumers tend to work in sectors where remote working is not an option.” If you want to see an area of the country that this is hitting hardest, look no further than Appalachia. Most people in that mountainous region drive between 30 minutes and an hour, one way, to work a job that barely pays better than minimum wage. The research also shows that lower-income consumers, finding themselves short on cash, have increased their credit card spending on gas, which suggests decreased savings as well. This isn’t a joke, folks… People are going to feel this crunch, and it’s not just the guys in jacked-up pick-up trucks. It’ll be people driving a 20-year-old car to and from work that are being hurt over this. Now, what’s the solution? Well, as we’ve discussed a few times, we may need to unleash the power of US fracking. If you were looking for a prospect, you may want to check out Select Energy Services (WTTR), a company that supports both fracking and traditional drilling with water and chemical solutions. [Their PowerStock rating score is coming in “bullish.”]( [Turn Your Images On] [(Click here to view larger image.)]( However, there are few things contingent on the company breaking out, most notably the Biden administration removing its moratorium for fracking on federal land. It may be time to unleash the American oil machine and worry about the environmental ramifications when we can afford to. Survival comes first. After all, that’s how my grandmother survived the Great Depression. --------------------------------------------------------------- [Turn Your Images On]( [AI to Disrupt Energy Market (Huge Potential Gains!)]( This orb represents the largest untapped energy source in the world… And although this energy resource is unknown by 99% of the public… It makes gas, coal, oil, wind, hydropower, solar, fusion… It makes them all look small fry… In fact, just one year of this untapped resource in the USA alone provides 5X as much power as the largest oil field on Earth… And this resource is about to be unleashed on the world like never before with the help of one tiny Silicon Valley company… [Click here for all the details…]( --------------------------------------------------------------- [Turn Your Images On] [Russia’s Economy Isn’t The World’s Largest…But It’s Still Disruptive]( by Ryan James Although the Russian economy is only the size of the state of Florida’s (no disrespect to Florida), it has an outsized impact on the world economy. Exhibit A: the war in Ukraine. The Russian invasion of Ukraine has been a big buzzkill for the already-struggling world economy. Natural resources ranging from oil and natural gas to wheat and fertilizer have skyrocketed in price as sanctions and responses to sanctions put pressure on many goods essential to industrial production and food. Russia’s economy is the seventh-largest in the world, with a GDP of $1.5 trillion. That sounds impressive, and after all, Russia is a top-ten global economy. However, the United States’ economy is 20x the size of Russia, and China’s is 14x. That’s why it is noteworthy that an economy that is so far behind the US and China is having such a large impact on the prices of materials and products upon which much larger economies rely. First, there is [wheat.]( The Russian-Ukraine region is known as the world’s breadbasket. According to Seeking Alpha, “Russia and Ukraine account for ~29% of global wheat exports, 19% of world corn supplies, and 80% of world sunflower oil exports.” And in other bad news, Commerzbank says that “as much as 15M tons of wheat exports from the Black Sea region could be at risk” from the Russia-Ukraine war. Russia and Ukraine are also among the [world’s largest producers of fertilizer]( which will exacerbate rising food prices and harm American farmers that rely on fertilizer to plant their crops. There are three primary sources used in the production of fertilizer: nitrogen, potassium, and phosphate. And guess which country is the world’s primary exporter of all three? If you guessed Russia, you are correct! Your prize for getting this question correct is… massively higher food prices. According to the [Wall Street Journal,]( “Russia and Belarus are the second- and third-largest potash [potassium] producing countries in the world. Russia was the top exporter of nitrogen in 2019, constituting 17% of global market share, and was the third-largest phosphate exporter.” And here is another pertinent fact: nitrogen fertilizer is made by using air (which contains nitrogen) and natural gas. Then there are the much-touted oil and gas exports from Russia. Russia produces 10% of the world’s oil and similarly accounts for about 10% of America’s oil imports. As you have no doubt heard by now, President Biden announced a ban on Russian oil and natural gas this week. Speaking of Russian natural gas…Russia has a lot of it. They have the world’s largest known reserves and ship about a quarter of the world’s natural gas to the global market. Oh, and they have a 102-year supply, so they aren’t going to run out anytime soon. Making matters worse, Russia supplies many components used in the production of semiconductors. The world has already suffered a shortage of semiconductors and the war in Ukraine isn’t helping the replenishment of supplies of chips that are used in our phones, computers, and cars, among other things. US-based semiconductor makers import neon gas, the chemical compound hexafluorocyclobutene, and palladium from Russia almost exclusively. Furthermore, the [Wall Street Journal]( reported, “Russia’s MMC Norilsk Nickel PJSC mines 40% of the world’s palladium, also used in catalytic converters to reduce vehicle emissions, as well as around 11% of global nickel production, used to make stainless steel and electric vehicle batteries, according to JP Morgan. Russia mines around 4% of the world’s cobalt, another battery ingredient; a quarter of its vanadium, used in steel making; and 3.5% of its copper, according to the U.S. Geological Survey.” The longer the war continues, the worse the global economy will be. --------------------------------------------------------------- [Turn Your Images On]( --------------------------------------------------------------- [Turn Your Images On] [Heads Up! Is Oil Headed To $200?]( by Shawn Ambrosino We had a good run, didn’t we? I mean, when you really think about the fact that a finite resource like oil has been kept at such a low price for so long, I think we’ve done pretty well considering, don’t you? Sure, we’ve had a few price spikes here and there. The oil crisis of the late 70’s… A few issues during Desert Storm… Then again during the War on Terror… Once more towards the end of Obama’s presidency… But all in all, we should consider ourselves lucky. When you look at the price index changes over that time, how we were able to keep oil so affordable for so long is something of an economic miracle. [Turn Your Images On] America has done great for itself in the energy department. The advent of fracking pushed America to the front of the line, and in 2015, we became not only energy-independent but also the world’s biggest producer of oil in the process. 20% of the world’s oil comes from the United States. That’s crazy to think about given that just a few years ago where we were forced to import oil from foreign (and sometimes hostile) sources. Oil On A Run… Where Will It Stop? Oil has seen a steady climb over the past two years, but in the past few months, oil has gone on a run. Of course, Vladimir Putin’s globally condemned attack on Ukraine has only exacerbated things, making the problems as global as the condemnation. Today, at the moment of this writing, the price per barrel of crude is hovering around $120–but there have been spikes that have sent it to over $130 periodically. And with prices at the pump over $4 almost EVERYWHERE in the US right now, people are starting to wonder just how high the crude prices may go. Is $150 the ceiling? $175? Or is it possible that we could see $200 per barrel crude prices? Well, it comes down to the same thing that all prices come down to: supply and demand. [Turn Your Images On] When it comes to this equation, the supply side isn’t really looking too good. Even before any official sanctions were levied against Russia - the market has already been in the process of shunning oil from Putin’s homeland. In fact, things have gotten so bad that Russia couldn’t find a buyer for an entire cargo ship’s worth of oil, even with an unheard-of $18-a-barrel discount. People would rather pay more for their gas than support a guy that will attack his neighbor unprovoked. But while Russia’s oil is a part of the problem, it’s not enough to fix the supply issues. Why $200 Per Barrel Crude Is VERY Possible Of course, any (or all) of the other major oil-producing countries could bump up production, but that’s not likely to happen. These countries are enjoying the profits they’re making with these soaring prices. That being said, if they were to bump up production, really only Saudi Arabia and the UAE could actually make a difference to meet today’s current demand…. Of course, Iran and Venezuela are both dealing with sanctions and Libya is in the middle of political upheaval, so these countries are pretty much non-entities when it comes to meeting demand. However, even if Saudi Arabia and UAE DID increase production, it would greatly deplete what’s left of the global market’s spare capacity, which would only push crude prices even higher until a more permanent solution is found. So, with OPEC out, Russia out, and Venezuela out… the only country left to alleviate the demand burden would be the US. That being said, even if President Joe Biden rescinded his moratorium on fracking on federal land, it would most likely take at least TWO quarters (or 6 months to most folks) for that production to make a dent in current oil prices. So, taking all this information into consideration, it is a very real possibility that oil could hit the $200 mark before the end of the year. In fact, given the current supply constraints and lag between a higher price and lower demand, we’re actually a lot more likely to see oil gain $80 in price than to come down $80 right now. That’s why investors should be looking at this as an opportunity. One of those solutions could be looking for an ETF that follows the crude market. When you take all things into consideration, the United States Oil Fund (USO) looks pretty enticing simply for the fact that it is an American-based ETF that invests in oil futures. Now, the StockPower rating system doesn’t include ETFs, so you may want to do a little research outside of my recommendation… Or, you could go with any publicly traded oil company. Just do yourself a favor and run their ticker symbol through the StockPower rating filter that you can find at the top of the [Money & Market’s homepage](. But that’s where we are right now. The possibility of $200 per barrel of oil is a very real one. All I can say is thank God cars don’t run on milk–because our fuel prices would be through the roof!! --------------------------------------------------------------- [Turn Your Images On]( [Man Called Tesla at $50, Says Buy This EV Stock]( He saw the writing on the wall before Wall Street did...He pounded the table to buy Tesla at $50, predicting it would go to $1,000. 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