00:00 Speaker A
We are already starting to see gas prices throughout this country starting to rise. And I put out a video this morning on my X account wearing a black hoodie just flat out slinging it, slinging it that by the end of this week, gas prices are likely to be higher than they are right now. What is the risk to consumers?
00:20 Inez
Well, that they will be paying higher gas prices and for a longer period if this continues. I mean, you already have the summer blend that is kicking in and that is sending prices higher, but on top of it, you have seen now over the last two days at the pump, a jump of 20 cents per gallon over the last two days. Yesterday it was 10 cents, over the next 20 over 24 hours it was another 10 cents. 20 cents. So it is sticker shock when you go to the pump and you see higher prices. And of course, especially going into the mid-terms later this year, uh consumers do not want to see these higher prices for gasoline. The question is is the straight of Hormuz as Tom was saying and whether or not uh the US uh Navy going escorting uh tankers and ensuring, look, Rebecca Babin, I just was uh corresponding with her. She was telling me this has ste stemmed uh some of the panic that is in the markets, but you still don’t see the risk premium leaving just yet because you have to see uh the execution of this. How will this be executed? Will these tankers be able to go through the strait of Hormuz? And the longer that this continues, the higher the probability that producers will have to do shut-ins. That means that they will basically have to close their wells because they don’t have enough uh storage capacity because these this oil is not moving through the straight of our Moose. Uh so you do see an upside risk to oil prices going even higher. And you got Goldman Sachs that just raised their price target on oil for the second quarter by $10 a barrel for Brent and $9 for WTI. So the longer this goes, the higher the probability that oil prices could go even higher.
02:07 Speaker A
Brooke, when we hear Nez uh drop the term summer blend, you know you’re in a very serious, you’re having a serious week. I mean, that’s some serious stuff. But to your point, uh to some of the stuff you’ve been covering uh there, Brooke. I mean, you talked to On CEO yesterday, he sounded optimistic. Their results were pretty good. Target, you know my feelings on there. We put out a hilarious uh post on X about my feelings. I thought the quarter was horrible. But again, they talked about on their earnings call, they have seen a resilient consumer. How long that can continue with gas prices going up maybe 10 or more dollars a gallon, not 10 or more dollars a gallon. Uh let’s say another dollar, dollar 50. I mean, that could be bad news for the shopper.
02:44 Brooke
We’ve been hearing this stat a lot that for every $10 jump in crude oil, that leads to a 25 cent increase at the pump and that’s why over the past few days alone we’ve already seen as Inez pointed out that 20 cent increase when it comes to the national average according to AAA. Now that could rise as much as 80 cents in the coming week as this sort of unfolds. That critical straight needs to ultimately allow oil to pass through in order for this, you know, demand or supply rather to sort of temper the expectation that crude won’t move higher in the near term that’s leading to these higher gas prices. And what I’m hearing from so many sources is that, you know, not only On telling me, On CEO Martin Hoffman telling me that the consumer is resilient, but also it just goes to the show that this is sort of emphasizing that that K-shaped economy will continue to persist, especially because gas prices have a direct correlation to how Americans feel about the way things are going in the US economy. We’ll get that preliminary data out from the University of Michigan when it comes to their consumer sentiment index on Friday, March 13th. All eyes on that to sort of understand how consumers, Americans are reacting to these higher prices, but we go to see from on from Target, from Best Buy that that high-income customer, that person making over or the household making over 100,000 continues to prop this economy and continues to spend despite all this uncertainty around them.