Energy Prices Surge, Amplifying Inflationary Pressure
October 25, 2021
Oil continued its rally Monday, with oil prices hitting another milestone. U.S. oil climbed 1.2% in interday trading, reaching $85.07 a barrel. This is the first time that oil has traded above $85 since 2014.
The rally has intensified in recent weeks as the world faces a global energy crunch. Prices of coal, natural gas and oil have all surged in recent weeks. Oil is up 13% this month alone and is now 120% higher than a year ago.
The increasing cost of energy is adding to inflationary pressure and raising the cost of living for Americans. The average price for a gallon of gasoline now sits at $3.38, up from $3.32 last week. A year ago, the average price for a gallon of gasoline was $2.16, albeit far fewer people were traveling then.
Higher energy costs will also mean higher prices down the road. A shortage of natural gas, which rose to a new record-high price in Europe recently, will not only mean higher heating bills this winter. The shortage has also crimped the production of fertilizer. This means that consumers may face higher prices at the grocery store next year, as farmers and food producers pass their higher costs onto their customers,