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How The Price Surge For Fuel Affects You

Daniel Plainview

Updated: April 11, 2022

price surge for fuel
Editor’s Note:

EDITOR'S NOTE: For most Americans, surging gasoline prices may be the most direct measure and representation of rising inflation. It affects our drive to and from work, and it makes us question whether distant or frequent trips to places that fall under the category of “wants” rather than “needs” are truly worth the expense. But as most people might suspect, rising energy prices boost the costs of other goods and services across a wide range of sectors and industries. From hundreds of petroleum-based products to rising food costs, surging oil prices are advancing inflation in many stealth ways. The Axios article below covers a good slice of the areas affected. It also does a great job explaining which products may be more sensitive to the volatile price surge in fuel. Read on.

Data: FactSet; Chart: Jared Whalen/Axios

We're all familiar with "pain at the pump," the narrative that launched a thousand local news segments. But there's more than one fuel product that can be pumped, and the extent of the pain can vary, Matt writes.

Driving the news: The price surge for industrial fuels such as diesel and jet fuel — byproducts of petroleum refining, known as distillates — have far outstripped the rise in price for consumer-facing products such as gasoline.

Why it matters: The surge in these acts as a stealth inflationary force, pushing up prices of a wide range of goods — anything that's trucked in — and services, such as air travel.

State of play: The difference in prices among these fuels crisply illustrates the economic concept of "elasticity," or how sensitive demand is to changing prices.

  • Gasoline demand is much more elastic than distillate demand. That's because consumers can, in many instances, decide to drive less, if gasoline prices get too high.
  • Industrial fuel like diesel, however, is less sensitive to climbing costs, because those costs can often be passed along to an end customer elsewhere.

Originally published on Axios.

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