How Does Oil and Gas Affect Inflation

Inflation is involved in virtually every aspect and every part of our daily lives, including manufacturing, transportation, utilities, materials, energy, fuel and more. When oil and natural gas goes up, all that is downstream from the raw material also go up and that creates rising prices and the potential for inflationary patterns to exist. Consumers must care and be aware. The immediate effect of rising petroleum prices outruns any rise in wages or the consumers’ capacities to afford products and services that are affected by those rising prices. Higher prices and increased demand puts inflation patterns across all sectors and industries. That means everyone is affected when oil and gas prices rise.

Oil is a common denominator in many factors of our everyday lives. We rely on it to operate our vehicles, heat our homes, power various utilities and even run entire industrial factories. So if the price of oil and gas rises, it’s easy to see why the price of the goods that require oil rise as well. It’s commonly believed oil and gas minerals are directly tied to inflation, and it’s true in some ways. However, it can also be a little more complex than simply a parallel movement with oil and gas and inflation. We’ve taken a closer look to see how it works.

Direct Impacts of Oil Prices and Economic Inflation

One of the first associations between oil and gas minerals and inflation came in the 1970s. This time period experienced an oil crisis in which the price of oil skyrocketed significantly. The result within the next year involved the Consumer Price Index doubling. It was this cause and effect situation which began the perception that oil and gas have a direct impact of economic inflation. There usually aren’t extreme changes anymore like there were in the 1970s, so the direct impacts aren’t quite as prominent.

Supply and Demand For Oil and Gas

The value of Oklahoma minerals today impact the United States and many other countries throughout the world. The shale boom has had significant impacts in the US in recent years, as it has turned a deficit of oil and gas into an oversupply. Now we are able to export crude oil to other countries, rather than consuming more oil than is being produced. This also means we don’t have to import as much oil and gas from other countries, while also creating more jobs in our own country to boost the overall economy.

Other Impacts of Oil and Gas Production

Oklahoma minerals have a significant impact on inflation today in the United States and globally. When the price of oil and natural gas is high, more jobs and investment opportunities are created within the industry and oil companies can afford to work to exploit more expensive shale deposits. The downside of the higher cost is consumers and businesses have to pay more for their everyday actions, like manufacturing and transportation. So in many ways, the price of oil and gas has a trickle-down effect in the US and similar impacts are made globally as well.

Eckard Land & Acquisition studies and explores everything related to Oklahoma minerals and mineral rights investing. Some of the biggest mistakes investors make is looking at mineral rights investing in too simplistic terms, which could mean missing out on great opportunities. We help investors look at the big picture and evaluate trends and statistics to maximize their profits. To learn more about how we can help you with your oil and gas investments, contact us today.