ALEXANDRIA, Va.—Oil prices have fallen, with West Texas Intermediate dropping below $95 a barrel, down 13% this week already, reports Bloomberg. COVID-19 lockdowns in China have impacted oil markets, as the country is the world’s biggest crude importer.
The Federal Reserve is meeting this week and is expected to implement an interest rate hike of a quarter percentage point, reports CNBC.
“The Fed must balance the necessity of reining in inflation with the necessity of supporting the economy,” said David Norris, a portfolio manager at TwentyFour Asset Management, told Bloomberg. “This is one of the most important Fed meetings in recent memory given the current pace of market developments and the fluid nature of geopolitical events.
U.S. Treasury Secretary Janet Yellen also said that a suspension of the federal gas tax is on the table; however, there is hesitation by the administration to implement such tax relief, as the move could benefit oil companies more than consumers at a time of tight supply.
“We’re looking at a range of things that we might do to relieve consumers of the gas tax,” Yellen said last Friday at a meeting in Denver.
CNBC reports that economists expect the new inflation outlook to bump up the full-year estimate to about 4%. Inflation is current at 7.9% over the past 12 months—a 40-year high.
Still, the sharp upward revision to the 2022 figure “should keep Fed officials focused on the need to respond to too-high inflation with tighter policy settings, especially against a backdrop of strong (if now more uncertain) growth and an historically tight labor market,” Citigroup economist Andrew Hollenhorst wrote in a Monday note.
The national average gas price still remains high at $4.32 a gallon, falling one cent from yesterday, but up from $4.18 a week ago and $2.87 one year ago. Lyft and Uber have both added a temporary fuel surcharge.
Lyft says the fees go directly to its drivers, since they are the ones responsible for filling up their tanks. Uber announced last week that customers will pay a surcharge of either $0.45 or $0.55 on each Uber trip and either $0.35 or $0.45 on each Uber Eats order, depending on their location—with 100% of that money going directly to workers’ pockets.
Gene Marks, founder of The Marks Group, a small-business consulting firm, recently wrote an opinion piece in The Hill, saying that he isn’t concerned about inflation.
“It’s a market economy. And the market is shifting. So we shift with it. The economy doesn't go away when prices go up. Things adjust. People spend differently. But they still spend,” he wrote. Marks has spoken at several NACS leadership events, most recently at the 2020 Conexxus Annual Education and Strategy Conference.
Marks says that he is cutting costs and raising prices, just like 68% of other small businesses have done, and he admits that his clients aren’t happy about it, but they understand because they are making the same moves with their customers.
“So, whether you’re a business owner like me or not, please don't worry so much about inflation,” he advises. “I'm not. It’s happened before, and it will happen again. Let's just make sure that we're smart about how we’re managing our money, that we're paying attention to the economy and we’re watching our pennies. But then again, shouldn't we always be doing that?”