This week, we want to look at how oil might affect the stock market. Given everything going on in Texas, oil might seem like the last thing on everyone’s mind, but it does affect investors, and we’ll get into that. Then for some fun news, we’ll take a look at the Mars rover Perseverance and this historic moment for space exploration.
Before we get into talking about oil, we want to acknowledge that many people and animals in Texas have been suffering because of the extreme cold and rolling blackouts. If you’re interested in helping, Rolling Stone has a comprehensive list of groups taking donations to help.
We likely all remember when just over a year ago, oil prices dropped to into the negatives. At the time, we discussed how financial investors had to pay to get rid of their oil contracts to avoid getting a physical delivery of oil.
Now, with the Texas blackouts, the energy market is shocked again. Although there is increasing attention to renewable energy resources most energy use still comes from fossil fuels. Oil and natural gas prices are usually closely related to booms and busts, and one thing investors have observed over time is that energy disruptions can occur at any time. Still, that production eventually gets back on track.
There are three ways that oil could affect investors over the long term. First, the energy sector’s performance affects the S&P 500 directly. Rising oil prices have helped boost the energy sector by 20% this year.
Second, energy prices effectively work as a tax on people and businesses. Gas prices have risen over the past year, and even though people are still driving less because of the pandemic, those higher gasoline prices eventually filter through all goods and services.
Finally, higher energy prices fuel concerns over rising inflation because if oil prices rise, corporations may raise prices on goods and services.
It will take time for everything to settle in Texas, for the people who live there, and for the disruptions to the energy industry. We will be keeping an eye on it, as always!
Another thing we’ve been eagerly observing this week is the landing of the Mars rover Perseverance. NASA landed this incredible robot on Mars on February 22. The landing video is well worth watching. The rover’s success marks the first time we have seen the landing of a spacecraft on Mars. A mini helicopter traveled with the rover and will perform the first powered flight on another world, likely to happen in April after Perseverance has reached an ideal location.
If you’re interested in learning more about Perseverance and the team behind it, this podcast provides some excellent information. For more on space travel and the possibility of someday living on Mars, the Emmy-winning TIME/PBS documentary series A Year in Space follows American astronaut Scott Kelly and Russian cosmonaut Mikhail Kornienko on their record-breaking stay at the International Space Station.
A lot is happening on and off the planet these days, and we’ll look forward to seeing what innovations and explorations the future holds.
Past performance is no guarantee of future results. Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.