THE BASIS POINT

Gas Pains

 

I am still recovering after fainting during my visit to the gas station last night – $4.20/gallon for regular unleaded near San Francisco.

Say what you want about the consumer being resilient, but money spent on gasoline is money not spent somewhere else – like in helping our economy. Most of this is due to issues surrounding Iran’s naval maneuvers and then moving to Iran’s nuclear program.

Experts think all this will be resolved, but analysts are already seeing this recent spike put a damper on global growth. As a rule of thumb, a $10/barrel rise in oil is a 0.2% drag on global GDP and a 0.3% drag on US GDP, and combined with the recession possibilities in Europe this is not good for economies – but fine for rates.

Here are one month, one year, and five year charts.


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Source:
Oil-Price.net

 

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