High oil prices hit retail spending

Oil markets

SHARE THIS STORY

US retail Jun12.pngBrent oil prices have just finished a record sequence of 240 days above $100/bbl. This was longer than the 170 days in 2008. And longer, on an inflation-adjusted basis, than in any previous period of high oil prices.

In Europe, prices were actually higher than in 2008 due to the lower value of the euro versus the dollar. Prices averaged €85.06 at their peak in June 2008. But in 2012, they were above this level continuously from January – May, and peaked 12% higher at an average €94.99 in March.

UK prices have seen similar peaks, due to the weaker £. Tesco are the world’s 3rd largest retailer, and as CEO Philip Clarke noted last week, when revealing disappointing Q1 growth figures:

“A tank of petrol still cost about £70, compared with £45 two years ago. That is an amazing dent in household budgets.”

US oil prices have been slightly weaker than Brent in recent months, but still averaged over $100/bbl from January into May. The reversal of natural gas prices back to long-term averages also helped to support consumer spending.

But even in the US, as the above chart from the American Chemistry Council shows, the damage has been done. Inflation-adjusted sales (orange line) have dropped quite sharply in recent months. As the ACC note:

“The report provides further evidence that the recovery is softening and consumers are again holding back, constrained by persistent unemployment and low wage growth.”

PREVIOUS POST

China battles economic slowdown

19/06/2012

Brent oil prices have just finished a record sequence of 240 days above $100/bbl...

Learn more
NEXT POST

Eurozone crisis gets worse, not better

21/06/2012

Brent oil prices have just finished a record sequence of 240 days above $100/bbl...

Learn more
More posts
Déjà vu all over again for oil markets as recession risks rise
03/03/2019

Back in 2015, veteran Saudi Oil Minister Ali  Naimi was very clear about Saudi’s need to adop...

Read
Oil prices flag recession risk as Iranian geopolitical tensions rise
20/05/2018

Today, we have “lies, fake news and statistics” rather than the old phrase “lies, ...

Read
Saudi oil policy risks creating perfect storm for Aramco flotation
15/04/2018

Good business strategies generally create good investments over the longer term. And so Aramco need...

Read
Economy faces slowdown as oil/commodity prices slide
12/02/2018

Oil and commodity markets long ago lost contact with the real world of supply and demand. Instead, t...

Read
Saudi Arabia’s ‘Vision 2030’ is looking a lot less clear
30/10/2017

Saudi Arabia’s U-turn to revive oil output quotas is not working and fails to address the chan...

Read
Oil market supply/demand finally begins to matter again as commodity funds withdraw
11/09/2017

Its been a long time since oil market supply/demand was based on physical barrels rather than financ...

Read
Oil heads back below $30/bbl as hedge funds give up on OPEC
10/07/2017

“Those who cannot remember the past are condemned to repeat it“. George Santayana 9 mont...

Read
Oil price weakness will unmask reflation and recovery myth
15/06/2017

Oil markets have been at the centre of the recent myth that economic recovery was finally underway. ...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more