Tariffs, Trade, and Trouble at the Pump: An Economics 101 Wake-Up Call
Some of us may remember (not so fondly) our college Economics 101 class and its basic concepts. For example, there is Scarcity: The idea that resources are limited, but human wants are unlimited. This forces people to make choices. There also is Supply and demand: The relationship between how much of a good is available and how much people want it. When demand increases, prices increase, which encourages producers to make more of the good. Then there is stuff like guns and butter and marginal cost. Sometimes you get stuck on butter and you say margarine instead of marginal, and you get an F. While we were sleeping in class, one of the most important concepts mentioned is International trade: How countries exchange goods to meet their demands. Countries import goods they can’t produce efficiently, and export goods they can produce cheaply. As we all learned in Disneyworld, it’s a small world after all. However, sometimes holding hands and singing kumbaya doesn’t sit well with some world leaders, and tariffs become the talk of the town. So here we are with a tariff edict. Our neighbors to the north and south of the USA have already suggested retaliatory tariffs that could weaken long standing trade relationships. Ooops.
An increase in the cost of Canadian crude will crimp some refining margins, that is until these costs ultimately get passed along at the pump. The unconventional light crude oil produced in the US is apples and oranges in comparison to the heavier crude oil we import, primarily from Canada. It’s not a substitute. Possible supply chain disruptions and rising costs likely won’t sit well with consumers, but the proof will be in the pudding. The Fed kept rates on hold after three straight rate cuts to end 2024, attached to a statement that inflationary risks had returned. This Friday will release a highly anticipated jobs report. An unexpected increase or decrease in employment will likely influence the Fed’s teetering position on rates.
The countdown has begun for AFPM on the beautiful Riverwalk in San Antonio which will take place in less than a month. The Tank Tiger is eagerly awaiting your request to sit down with us for a 30 minute meeting. That’s right, get to know the folks who put together the ideal storage solution for you. Please let us know and we will get you on our meeting calendar. Finally, we’re pleased to announce that we will be hosting a networking gathering and Happy Hour on Thursday March 20th in Houston to commemorate our 10 year anniversary! Keep an eye out for an invitation in your email which will be going out shortly.
