Fuel Prices

[Unit 5302]

The prices of goods will undoubtedly increase somewhat due to the temporary artificial inflation caused by increased fuel costs. That being said, the increase in fuel costs is temporary, and refineries are already coming back online. Interestingly enough, the damage doesn't appear to be as severe as the oil companies initially indicated. It seems as though they may getting a little political pressure to keep their ducks in a row so to speak.

Anyway, as the Federal Reserve is likely to indicate at their next meeting, this is a temporary production issue rather than a supply issue, and I expect interest rates to rise another 1/4 pt at the end of this month.

Oil futures have already dropped about $5/bbl, and countries like Kuwait have pledged millions in free oil. Average gasoline prices declined over the past 24hrs from an all time high of $3.06 to $3.04/gallon for regular unleaded. Now that the Labor Day weekend is over, people are actively watching their fuel consumption, and refineries are coming back online I expect fuel prices may fall. I'm still concerned about the price of oil futures, and I'm having difficulty understanding why they are so high. Many Natural Resource Portfolio's are up 40% year to date. A ridiculous return.