International oil prices have soared again, on March 27, 2022, international crude oil futures rose 5% on the day to 115 US dollars / barrel, a new high since June 2014, what is the reason for this round of oil price surge, what is the difference from the previous times, and what is similar, will the oil price surge trigger a global recession? How should we ordinary people cope? Today's show, let's dig together to dig the secret behind this round of international oil price increases.
Hello everyone, I am Hongge, very happy to meet with you again, today's program is full of dry goods, I have studied the reasons for the recent rise in international oil prices, is to help you find behind this oil price surge, is there a deeper law hidden, in the face of soaring oil prices and other costs of living, how should we ordinary people deal with it? If you feel that today's content is helpful to you, don't forget to give me a thumbs up, originality is not easy, persistence is more difficult, your support is my biggest motivation
2022 is only a quarter past, but it has already created a lot of history, this year is too difficult, the dollar interest rate hikes, the Russian-Ukrainian war, air crashes, when everyone feels that these big events have little to do with their own small days, the chain reaction has already begun, of which our ordinary people will experience the most obvious is: oil prices have risen.
Taking the Changsha region of Hunan as an example, the current price of No. 92 gasoline has reached 8.76 yuan per liter, And No. 95 gasoline is more expensive, 9.4 yuan a liter, according to the fuel tank capacity of 60 liters of ordinary household cars to calculate, from the end of 2021 to now, it will cost fifty or sixty yuan to fill a tank of oil.
With the rise in oil prices, the online scribblers began to be active again, 92 filled with loose legs, 95 filled with bankruptcy, 98 filled three generations of repayment, and some people joked: The best way to deal with the rise in oil prices is to drink more, because drinking can not drive. Now, even if ordinary people can afford to buy a car, they can't afford to refuel.
So, why did this round of oil prices rise so fiercely?
There are several reasons for the surge in oil prices, and the initiators are as early as two years ago. The COVID-19 pandemic in 2020 has just begun to break out globally, and the world's financial markets have been hit by the epidemic and have plummeted sharply, with the US stock market being the most striking. In the month from February 19 to March 23, 2020, the U.S. stock market experienced the most rapid crash in history, with the S&P 500 falling by more than 33% and four plunges in a month. Ninety-year-old Buffett has only seen 5 circuit breakers in the US stock market in his lifetime, 4 of which occurred in 2020, and as the liquidity of equity assets deteriorated, the United States adopted a quantitative easing policy that exceeded expectations. This relaxation is reflected in all aspects, the government not only greatly increased fiscal expenditure, but also required financial institutions to reduce the loan threshold and loan interest, and finally directly issued subsidies to the hands of the people. Under the government's round after round of stimulus policies, soon, a series of consequences of excessive easing began to appear, of which the most obvious experience of ordinary people was inflation.
Since 2020, the United States has exceeded expectations of quantitative easing, similar to the intensity of The Second World War, in 2021, what word is the most popular, is to increase prices, with oil as the representative of commodities all the way to the top of the song, up to parents do not know.
However, the price increase of oil driven by monetary easing is not difficult to solve, and the root cause of his production is because the government has issued more money, and oil as a commodity, his production has not increased significantly, so the price of oil has gone up. Since it is only because there is more money, and the government takes the money back, the price of oil can be normal. Under normal circumstances, since 2022, as the Fed's interest rate hike cycle kicks off, the market predicts that the price of commodities such as oil will continue to fall.
However, people are not as good as the sky, in February 2022, the Outbreak of the Russian-Ukrainian War, Russia is the world's second largest oil producer, but also a major energy exporter, the domestic oil and gas reserves are very rich, is a pivotal role in the international oil supply chain.
When Russia and Ukraine started a fight, the first thing the Western countries represented by the United States wanted was not to mediate, but to exert pressure on Russia through economic sanctions, which was good, the United States simply interrupted energy transactions with Russia, and the energy cooperation between Europe and Russia also suffered a huge blow, and European countries could only face the dilemma of domestic energy surge while tearfully reducing oil imports to Russia. Western economic sanctions against Russia have completely upset the balance of international oil supplies, and all of a sudden, oil prices have become like an emotional child, completely out of control.
Another factor that has led to higher oil prices, but which is easily overlooked, is the production cut organized by OPEC. Crude oil prices plummeted in 2020, when the Middle East these oil-producing countries to the loss, how much to sell how much to lose, and even the phenomenon that the barrel is more expensive than oil, in order to earn back the loss, OPEC member states invariably chose to reduce production, and signed a production cut agreement to jointly promote the recovery of oil prices, the consistent production cuts of oil-producing countries led to tight international crude oil inventories, which further aggravated the imbalance between crude oil supply and demand.
In fact, after the shortage of global oil supply, the United States is also trying to cope, on the one hand, the rapid rise in oil prices has caused greater inflationary pressures in the United States, on the other hand, the United States, as the leading big brother, also has to help its allies solve the problem of oil consumption. The United States tried to contact oil-producing countries such as Venezuela in South America and Iran in the Middle East, but these countries have been more or less sanctioned by the United States in history, and the U.S. help plan has not been so smooth.
The second big problem, the international oil price surge has appeared several times in history, but each time there is basically a strong chain reaction, so what will be the consequences of this round of oil price surge?
From Post-World War II to the present, not counting this year's time, there have been five oil price increases of more than 100% in history, namely from 1970 to 1974 and from 1978 to 1980, the two oil price surges were mainly due to local geopolitical events, the third oil price surge was during the Asian financial crisis in 1998, and the fourth and fifth oil price booms appeared before and after the subprime mortgage crisis in 2008.
Each oil price rally, though for different reasons, almost ended up leading to some degree of recession in the global economy.
Economist Li Xunlei pointed out in his research that crude oil prices are, to some extent, more reflective of global economic cycles than stock markets. Although the stock market is said to be a barometer of the economy, it is more affected by monetary policy, and crude oil, as one of the most important industrial raw materials, is known as the mother of industry, and the cost of all aspects of the real economy is closely related, such as the price of chemical raw materials, plastic products are inseparable from the price of oil, and the price of oil also directly affects the cost of transportation.
Li Xunlei intercepted the historical performance of the DOW Jones Industrial Index in the United States after World War II, and compared the index trend with the international oil price trend, and found that there was no general deviation between the two. That is to say, in addition to the lack of supply, the rise in oil prices also reflects the growth of demand for oil in various countries, which is particularly evident in the upward cycle of the economy, and once the oil price turns downward, it often means the weakening of aggregate demand and the beginning of the downward cycle.
However, in addition to the oil price itself, the international environment for this price surge is more complicated. In 2022, in order to curb rising domestic prices, the United States to start a cycle of interest rate hikes is clear, and historically, every time the US stock market raises interest rates, it has almost played a cooling effect on the global economy.
Whether it was in 1986, 1995, or as recently as 2014, after the Fed raised interest rates, global funds began to flow back to the United States, and the economic growth rate of other economies around the world except the United States has invariably declined.
However, even if the dollar rate hike is relatively clear, the biggest black swan of the year remains out of control. When the Russian-Ukrainian war first began, many friends on the Internet predicted that Russia would end its military operations against Ukraine in the form of a blitzkrieg, so far, the war has passed for more than a month, the people have expectations for peace negotiations between Russia and Ukraine, but at the same time, the war is also constantly going to protracted, the longer the time is consumed, the greater the uncertainty of this showdown, but the market is most afraid of uncertainty.
From the comprehensive point of view of the above aspects, the rise in oil prices is not only the embodiment of the economic cycle, but also can reverse the economic development and change the direction of economic development to a certain extent. Historically, almost every round of oil price surges has been closely followed by the deceleration of global economic growth and the beginning of the recession cycle, and from this point of view, the current external environment, no matter from any aspect, deserves our vigilance and adequate preparation.
So, what can we ordinary people do at this time? A few simple tips for everyone.
First, don't blindly hype energy and commodities.
There are many people around us, watching the war coming, to hype energy, hype commodities, this behavior is actually very dangerous, the general direction of the Russian-Ukrainian war is not clear enough, this time to participate in the hype, it is equivalent to gambling. I have a friend, at the beginning of the Russo-Ukrainian war told me that he bought crude oil futures, at the beginning he did make a lot of money, the confidence in investment is getting more and more sufficient, the amount of funds is increasing, as a result, as Russia and Ukraine began peace negotiations, oil prices fluctuated sharply, in the face of fluctuations, he was selling when he rose, and when he fell, he bottomed out in the middle of the mountain, and the money earned had long been spit back.
The following sentence is a summary of my countless cases, if you are doing investment, you must listen: in any mature market, if most people think that this is an opportunity, this time must be absolutely careful, it is likely that this is a trap. Specialized investments such as energy and commodities are difficult for retail investors to make money. If you are not professional enough, don't participate, don't get cut leeks.
Second, reduce unnecessary expenditure and do a good job of open source and cost reduction.
Economic operation has its own laws, we ordinary people are difficult to change the general trend, since this is the case, we may as well calm down to think about what we can do well in the trend, as far as possible to reduce the impact of the environment on themselves and their families. The rise in crude oil prices will lead to the rise in the prices of many chemical products and raw materials, and it can be expected that in the future, many commodities are facing pressure to increase prices, the most typical is automobile consumption.
In order to reduce the impact of price increases on the quality of life, I suggest that you can consider reducing unnecessary expenses in life, the original if you spend money without a plan, all by feeling, I suggest to do planning, if the original is very planned, you can consider reducing expenditure items, such as for friends who want to buy a car or want to change cars, just can consider new energy vehicles, with charging instead of refueling, our country's current new energy vehicle industry chain has been very mature, whether it is brand or positioning, basically can meet the needs of domestic consumers.
What I share with you above is my recent thinking about the sharp rise in oil prices, but from my personal point of view, this problem is more to see the international situation and global economic trends behind international oil prices, which cannot reflect the situation of our country, in other words, when the whole world is spending the winter, we rely on the national policies and the unity and diligence of the people, but in this cold winter, we can grasp the cultivation of internal strength, reserve energy, and wait for the arrival of spring.
This is a relatively poor era, the arrival of the economic cycle or good, the international situation is turbulent, relative to the residents of other countries, our Chinese people's life is still quite good, European countries in this round of energy price surge process implicated the largest, the most deeply affected, deep to what extent, for example, the original monthly 500 electricity bills, now become three or four thousand, although European countries are richer than us, but the gap between rich and poor is actually not so big, The biggest difference is between government capacity and management levels. In the final analysis, without the protection of the state and the government for our people, this great international change that has arrived may affect everyone more than this.
Well, I'll talk to you about this today, has your life been affected by the soaring oil prices? Welcome to leave me a message to talk about your thoughts, friends who like my program don't forget to like, pay attention to and collect, I am Hongge, we will see you next time on the show.