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Gasoline prices rise on uncertainty

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Gasoline prices rise on uncertainty

Over the last month consumers have witnessed their fuel prices rise dramatically. The Syrian conflict, and headline risk, has helped move oil futures even further to the upside as of late. During times of economic turbulence, Wall Street and retail investors alike favor hard assets such as commodities. Everything from oil to gold, to grain has caught a bid from shaky hands. According to a recent survey released last weekend, gasoline prices rose 2.61 cents per gallon, taking the average cost to $3.5847 on Sept. 6. This number is up from $3.5596 on Aug. 23. On a year over year basis, prices have surged by more than 25 cents, based on a survey of about 2,500 retail stations in the 48 contiguous states.

U.S. crude futures are up 3.9 percent over the past two weeks while Brent crude is up 4.6 percent. On Friday, crude rose 2 percent to settle at $110.5 amid broad market turbulence. So one may wonder the significance of such gradual increases in the price of fuel. Well, even small increases in the price of gasoline can pinch the pockets of consumers. Last month a number of large retailers including Walmart (NYSE:WMT) recorded disappointing results due to higher fuel prices. Fuel expenditures make up a significant proportion of consumer costs, therefore a 10% increase in the price of gas may pull an equal amount of money out of the discretionary budget. Moreover, its psychological, the visual effects of $4 per gallon in some parts of the country have been shown to decrease consumption.

So who benefits? As of late the energy space has caught a bid. There are little fears of a gasoline shortage, however, during the short term the savvy investor may attempt to benefit from exuberance within the sector. One may consider an exchange traded fund, diversified throughout the energy space for exposure.

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