Oil and gasoline prices continue to rise after collapsing in 2008 following the financial crisis. Consumers and businesses once again are struggling to keep up with rising energy costs. In fact, rising energy costs affect 95% of the economy. The costs of doing business and heating your home have become more expensive.
The oil prices and gasoline prices will continue to go higher in the long run due to many factors. The emerging market such as China, India and Brazil are growing rapidly. The consequence of this will be more energy consumption. According to BP, the global energy consumption is expected to grow 39% by 2030. A recent IEA report said that demand for oil in developing countries will grow 1.2 million barrels per day (bpd) while oil demand in developed countries will shrink 400,000 bpd.
Another factor is that central banks all over the world are stimulating the economy with cheap money. This makes oil and gasoline more expensive with the fiat currencies. Also, government interventions in the oil market such as taxes, royalties, threats of nationalization and regulations create under investment in the public and private oil companies to find, develop and refine more oil.
Unfortunately, there is no substitute for oil and gasoline that is economical and cheap. Consumers and businesses have no choice but to hedge against rising energy costs. One of the ways to protect your holdings is to invest in the futures market. The futures market is a place for professional investors in the commodity industry. The futures market focuses on farm futures, commodity futures, energy futures and transportation.