Hot Summer Ahead

Issue 127

The world is in for a hot summer, not due to any particular forces of the weather or climate, but because energy prices are so high that it's cheaper to sweat and suffer than run the home AC all day or let the car idle in the Costco parking lot as you wait for your significant other to scrounge for an industrial size bag of ice.

The U.S. National average for gas has officially blown past $5 a gallon with some analysts predicting that prices could exceed $7 by November if corrective measures aren't taken.  By the raw numbers, Statista reported a national average of $2.60 a gallon in 2019, meaning prices are up 92% from pre-covid prices.

Americans will also see a steep rise in keeping their homes cool.  According to the Consumer Price Index, energy prices are up on average 12% from 2021.  That is if you put any confidence in the CPI.  In our professional estimation, buying 2-3 bags of ice every day of the summer will actually be cheaper than air conditioning.

Source: Bloomberg