Well, the unthinkable has happened. Putin has decided to launch a full-scale invasion on Ukraine. When rockets starting flying Wednesday night, crude prices soared over $8/barrel. By the end of the next trading day, crude prices closed LOWER than the high of the week prior! And then on Friday, crude prices traded lower to prices not seen in two weeks. As I have been writing for weeks, the US and the world can not continue to recover their economies at these high energy prices. Biden and many other crude countries announced that strategic petroleum reserves are on the table to keep prices in check. The announcement caused traders to take pause. And in other news this week, the US and Iran both believe the finish line to a nuclear deal could be signed next week. In addition to lifting sanctions on Iranian crude exports, Iran is willing to do a prisoner exchange which has not been done in many years. The world is preparing to lower oil prices in order to prevent Russia from profiting on their act of war. If the Iran deal is cut next week, and the world comes together on strategic reserve releases, Saudi Arabia UAE will be forced to increase production in order to compete for market share. Couple all of this with the FED raising rates, and high oil prices could go into the rearview mirror. If prices do indeed fall and world producers increase next month, I expect to see sanctions start on Russian energy and SWIFT banking. Sanctions on Russian energy would cut Russia off at the knees. The next few months are going to be some of the most historical months to watch playout in terms of war, energy, and economic recovery. At least the pandemic seems to be ending which will be one major issue off our backs going into the spring.
In local news, gasoline and diesel retail prices will probably hold at current rates. The jump in cost did not occur as expected from the Russian invasion but the situation is very dynamic and can change in a minute.
Propane prices have remained stable but supply chains have been choppy at best. Rail shipment delays coupled with a pipeline shutdown for repair have caused headaches in Wisconsin. Thankfully the worst of winter is behind us and we should get through this just fine. Even though the major cold is behind us, snow and ice are still issues for the coming months. Please make sure to keep your driveway plowed and salted to ensure a safe and efficient delivery.
As always, if you have any questions, comments, or concerns, please feel free to give us a call.