Gasoline price climb for the fourth straight week, guess the inflation story isn't over yet

doctorpot1: US CPI at 6.5% same as the 6.5% that was expected. CPI for all items declines 0.1% in December as gasoline and oil price decreases significantly

The fall in energy commodities is the largest contributor to the drop of US CPI in Dec 2022, the fall was so huge that even though there was an increase in many other factors, overall CPI still fell to 6.5%. In my earlier post on the CPI number, I mentioned that this is worrying because it seems like oil is the factor that helps to lower inflation but there are many factors that are outside of US's control. Such as OPEC+ decision to cut oil production and China sucking up more oil as they reopen.

It seems like China's re-opening is starting to push oil prices back up, which may cause inflation to go back up if the other items doesn't start falling anytime soon. China's demand for oil have been strong, despite the surge in new Covid cases, which should have slow down their demand. In a few weeks time, when most have recovered from Covid and is now naturally vaccinated to it, I wonder if oil price will continue on an uptrend or not.

The national average for a gallon of gasoline is $3.423 per gallon as of Monday, according to AAA data. Gasoline prices are up 11.8 cents over a week ago. Rising for four straight week by 32.7 cents over the last month, data from AAA showed on Monday. This is despite US retail gasoline demand falling by 1.4% in the last week ending on Saturday, with demand falling sharply in the Rockies.

Gasoline prices are rising along with the rise in WTI crude oil prices, which are up $3 per barrel from a week ago, and up $2 per barrel from a month ago. In addition to rising crude oil prices, gasoline prices are rising as "continued refinery challenges kept supply of gasoline from rising more substantially," Patrick DeHaan, head of petroleum analysis at GasBuddy said in a Monday note.

The East had benefitted from the cheaper oil from Russia, and China had been signing tons of energy deals to secure oil supply. The West will need start finding more supplies or face a energy cost disparity.

To combat the higher cost of oil, EU had pushed forward a windfall tax to claw back a minimum 33% tax on profit of oil giant's like $Exxon Mobil (XOM.US)$ and $HARBOUR ENERGY PLC (PMOIF.US)$. $Exxon Mobil (XOM.US)$ had sued EU on the tax to try and get it removed; While $HARBOUR ENERGY PLC (PMOIF.US)$ which employs 1500 works reacted by saying they will be cutting down jobs due to the tax, and they had warn that the tax will reduce investment in oil and gas, which is what the West now needs. Coupled with the Inflation Reduction Act and all the green initiatives to kill big oil and gas companies in the long run, I wonder what will the companies do? Invest and get killed in the future, don't invest and get taxed now.

Singapore holds a different view from the West. We believe that taxing energy companies arbitrarily on their recent windfall profits will lead to business uncertainty and disincentivise long-term investments in the energy transition, Senior Minister of State for Finance Chee Hong Tat told Parliament on Tuesday. This will ultimately make it harder for Singapore to achieve its ambitious decarbonisation targets, he said.

The market is a turmoil, given that inflation reduction is controlled by oil and gas for now, but the world leaders are trying to kill the companies in oil and gas when we need them the most. I won't be surprise if inflation starts to rise again in February or March 2023. This coupled with the debt ceiling issue landing on the laps of a super polarised political Congress, I'm sure we can profit from it by doing short term option to bet on $SPDR S&P 500 ETF (SPY.US)$or $Invesco QQQ Trust (QQQ.US)$ up or down price movement, on the data released date, such as CPI data released date, FOMC rate hike date.

source: U.S. Gasoline Prices Continue To Climb | OilPrice.com, Exxon sues over EU fossil fuel 'windfall tax', Harbour Energy to cut jobs after UK windfall tax, Inflation Reduction Act of 2022 - Wikipedia, Imposing windfall taxes on oil firms is populist, will deter investments in clean energy: Chee Hong Tat

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i short the sheriff : stock market should retreat... heavily I hope..

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doctorpot1 OP i short the sheriff : maybe if US debt issue is not resolved and they defaulted, then yea, it will retreat heavily.... but I think many countries will feel the pain too maybe even caused a global panic in all market, but would good for people who wants to accumulate shares hahaha

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Cardinal-BagHolder : Strategic reserve is prob tapped thanks to bozo in white house

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doctorpot1 OP Cardinal-BagHolder : yea the articles did mentioned that the US isn't releasing more oil from SPR so it doesn't help to reduce the oil prices. probably will see energy going up a little in Jan/Feb CPI data

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doctorpot1

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crawled out of poverty, working towards FIRE!! (financial independence, retired early)

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