It makes me sad that this month’s topic is in relation to a war.  My heart goes out to all of the people of Ukraine who did not choose this.  I could not ever imagine the horrors of what they are seeing right now.

What I want to cover in this article is what we need to be aware of now that we have a significantly rising price of oil happening that was not even a blip on the radar a few months ago. 

Let’s talk oil.  Aw yes, the slippery stuff we can simply never get away from in global conflict.  Unless you have had your head under a rock the past few months, you have noticed that the price at the pump is significantly higher.  The main reason for the recent increase in oil is the fact that Russia controls a good portion of the world’s oil.  And without their oil, there becomes less of it creating an increase in prices.  For consumers, that is an obvious bad thing.  However, the ripple effect on the economy is my main concern, not just the price at the pump.  Be honest, have you purposely stayed home recently due to higher gas prices?  Most people have not. 

We need to address is the price of fuel for airlines.  While you may or may not fly very frequently, a higher price is not doubt a deterrent for taking a flight.  If fewer people are flying, that would mean that travel destinations such as hotels and resorts would be negatively impacted.

 Now, if there are fewer people in the hotels, then that means that there would be fewer people going to restaurants by the hotels.  That then has a negative impact on the restaurants.  If there is a negative effect on the restaurants, then there will be fewer people leaving the house to go shopping while they are out.  So, that would have a negative impact on retail goods.

If there is a negative impact on retail goods, that means that fewer people will be going to stores to buy stuff.  Should that happen, there will be a lesser demand for retail stores to buy wholesale items.  Then, we will have a negative impact on wholesalers. I could do this all day, but I’m guessing you get the point.  I didn’t even mention potential inflation or supply chain issues.  Those have an impact as well.

With all that negative talk, what can we do to get through potentially a rough time coming up?  First, have a deep understanding that America has seen much worse things.  Our country has survived some of the most brutal wars in human history, the Great Depression, global pandemics (long before covid), and many more problems.  America is a country of not only survivors, but winners. 

Second, you need to make sure that you have a plan for a potential storm with or without the things mentioned in this article.  For example, if you are concerned about rising interest rates (see previous post), make sure that you pay down or lock in any variable interest rate loans.  Also, make sure you have a plan on how you plan to manage any fixed income holdings should interest rates rise.

Finally, make sure you have a plan of what to do if you lose your job, your business stops prospering, or your investments don’t work the way you originally intended.  Things like that happen all the time, but in recent times, it has not been the norm in American society.  I like to tell people to be confident in what they are doing, but never be reckless.  Being prepared is never a bad idea.