Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or to subscribe for the latest trends and forecasts from our highly experienced Kiplinger Letter team.
The rout in financial markets since President Trump announced sweeping new tariffs hasn’t spared the oil market. Benchmark West Texas Intermediate dropped sharply since Trump’s April 2 “Liberation Day” announcement of the tariffs, falling from $72 per barrel to $61. How much lower oil could go is difficult to say, given how unusual the current market climate is: A sudden trade war that shows no sign of de-escalating. Hefty U.S. tariffs on China, and Beijing’s retaliatory duties, threaten to disrupt trade between the world’s two largest economies, hitting many industries in the process. Oil traders are fearful of just how much demand for crude could suffer.
For now, we look for WTI to hover around $60, but with plenty of volatility. If the economic outlook darkens further, it’s not hard to imagine oil dropping to $50, a level that would likely lead many energy companies to severely curtail drilling, and possibly shut down some existing wells. That loss of supply could put a floor under prices.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For consumers, the plunge in oil means progressively lower prices at the gas station in coming days. The national average price of regular unleaded is $3.21 per gallon, down six cents from a week ago. Unless oil rallies sharply soon, we could see the national average dip below $3 before long. That will keep a little extra money in drivers’ pockets, which could come in handy when new tariffs threaten to raise the price of many consumer goods. Diesel, now averaging $3.61 per gallon, is also starting to decline and should be below $3.50 soon.
The arrival of spring weather has weighed on prices of natural gas. Benchmark gas futures contracts, which had been over $4 per million British thermal units in recent weeks, have fallen to about $3.50 per MMBtu. For now, prices figure to trend lower, since mostly mild weather across the country should keep demand low and allow stockpiles of gas in underground storage to rebuild after declining sharply last winter. But come summer, gas demand will rebound as hot weather fires up electricity demand. Gas is the top fuel for generating power in the United States, so heat waves lead to lots of gas being burned by utilities. That could get prices back above $4 per MMBtu if this turns out to be an especially hot summer.
Related content
- Gas-Saving Tips That Actually Work
- Who Controls Gas Prices in the US?
- Save Money on Heating Costs With These Easy Solutions
-
The ‘First Year of Retirement’ RuleThe 'first year of retirement' rule says the 12 months after you leave work set the tone for your entire later life — so it's vital to approach them mindfully.
-
Tech Stocks Drag This Growth Fund DownA rough stretch for mega-cap tech and tech-adjacent names has put pressure on this Mairs & Powers mutual fund.
-
Tech Stocks Drag This Growth Fund Down
A rough stretch for mega-cap tech and tech-adjacent names has put pressure on this Mairs & Powers mutual fund.
-
Timing Is Everything for Roth Conversions: An Expert's Guide to the Right StrategyUnderstanding the nuances of Roth conversions can help you avoid forking over more money in taxes than you need to.
-
Are You Ready for the Emotional Side of Retirement?Financial adviser warns that life after work is coming, so start preparing … mentally, as well as financially. If you're nervous, take heart. Some simple strategies could ease the way.
-
Stock Market Today: Dow Dives 769 Points on Iran-Israel ConflictLosses accelerated in afternoon trading amid reports Iran retaliated against Israel.
-
Four Ways to Help Prevent a Market Downturn From Scrambling Your Nest EggYou may not be able to avoid a market decline when you're newly retired and starting to rely on your nest egg for income, but you can plan for that risk.
-
Is Your Home Disaster-Ready? An Insurance Expert's Guide to Preparing for Storms and FiresHomeowners can take these steps to protect their properties from hurricanes, tornadoes, wildfires and hail, while also potentially reducing their insurance costs.
-
Stock Market Today: Stocks Rise as Treasury Yields DropA round of not-too-terrible economic data helped boost the bond market Thursday.
-
A Financial Adviser's Defense of Annuities: They're Just MisunderstoodAnnuities can offer retirement income stability and security against market volatility, though some do have drawbacks. The key is to understand their features before buying.
