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market vibes

Commodity prices have always been volatile. Diocletian used price controls in 300 AD because wheat and wine were too expensive. When Spain colonialized the New World in the 16th century so much gold and silver was sent to Europe the surge in Spanish M2 sparked a 100 years of pan-European inflation.

Europe fought wars over colonial spices and sugar for centuries. In the first half of the 19th century, especially in America, a scarcity spike in whale oil directly caused the discovery of kerosene and the founding roots of Exxon Mobil in 1863. We have so many alternatives to crude oil today the bouquet of energy is already de-escalating market tensions. Is the Strait of Hormuz as real a problem as pundits and politicians make it out to be? Or is the market simply adjusting to ordinary events? First… let’s do the math.

The price of oil is nominally cheaper today than it was in 2008 or 2022 when oil prices experienced historic spikes. Plus, transportation fuels are cheaper per vehicle mile than ever because vehicles, including planes, trains and ships are more efficient. History doesn’t care why oil prices are up or down; Wall Street squeezes, embargoes or wars… the price is the price. A barrel of oil is nominally 20% cheaper today vs $147 in 2008… and as much as 40% cheaper in CPI inflation adjusted dollars.

However, arithmetic and docile facts do not attract audiences on TV or clicks on social media. Any price increase from an arbitrary low base can be gussied up to sound apocalyptic. The most important question for someone trying to make investment decisions in Q-2, 2026 is, are these inflation narratives validated by market prices? The simple answer to that question is no. They are not.

For most of 2025 oil traded in the $55–$65 range … an average 2008 CPI-equivalent of $35–$40 per barrel. NYMEX RBOB settled at $3.29 yesterday… almost exactly where it traded in Q-2 2008 in nominal dollars. In CPI-adjusted terms gas today is $2.00 per gallon in 2008 money.

The same math applies to everything. The dollar has lost approximately 40% of its purchasing power since the GFC, so gold at $4500 is worth about $2700 in 2008 dollars. The dollar has lost approximately 85% of its purchasing power since gold was legalized in 1975 so gold is worth about $625 dollars/toz in 1975 dollars. Oil is worth about $15/barrel today in 1975 dollars (average actual price was $13/barrel in 1975). The Federal debt, GDP, houses eggs hats and hammers… the water in the ocean is the water in the sea.

What is different is humans learn and forget at an almost equal rate from generation to generation. My sense of inflation begins when S&Ps were trading 150. By that measure today if nothing had changed S&Ps would be worth around 900. Not too shabby. But Federal powers to print money and issue debt have separate realities for a young family today vs me in my private world planting potatoes, feeding my wild turkeys and writing.

Cash is like an ice cube that melts in your hand. If you need ice you will keep ice as well as you can. Gold is timeless. My point is money never changes if you follow the “money” part. Life changes every day which is the best part.

“for all its sham drudgery and broken dreams it’s still a beautiful world…” Max Ehrmann

wishing you a joyous Easter!

JJ

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Charts and data CQG and Bloomberg… occasional cartoons by Gary Larson

Market vibes is not a registered investment advisor. Comments, thoughts and opinions are entirely those of the author without any representations to accuracy and are for informational use only. Any mention of a particular security, index, derivative, or other instrument is NOT a recommendation to buy, sell, or hold that security, index, derivative, or any other related instrument..