Soaring diesel and gasoline prices weigh on inflation and economic recovery
Vrasidas Neofytou
Head of Investment Research
Gasoline and diesel prices have reached new highs due to a combination of record low seasonal stockpiles, limited refining capacity, surging crude oil costs, Russian oil sanctions, and rising demand.
Due to rising refining prices and green energy transition legislation, many refineries in the United States, Canada, Russia, and Europe that transform crude oil into fuels have either scaled back operations or retired completely, reducing global oil processing capacity.
The proposed embargo on Russian petroleum products might exacerbate the present diesel and gasoline shortages in the United States and Europe as the summer driving season approaches.
The rising price of refined petroleum products is posing a threat to the post-pandemic economic recovery, putting pressure on global supply networks, and pushing inflation to 40-year highs.
The fast spike in gasoline prices has surprised car users, but the price of diesel has increased even more, leaving major productive and economically vital sectors subject to cost shocks.
Diesel engines power more than two-thirds of industrial, transportation, agricultural, and construction equipment, and any price increase adds to the economy's inflationary pressures.
Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Exclusive Capital communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.
