Oil Prices, Geopolitics, and Your Grocery Bill: The Forces Moving Your Money
You filled the tank this week and watched the total climb past $60. On August 9, the national average for regular gasoline was $4.01 a gallon, close to 90 cents above where it sat a year ago. For a household running two cars typical miles, that leap adds up to something near $1,000 over a year. Then at the grocery store checkout, you’re seeing that total creeping up as well. Costs like that can directly impact your plan, you’re likely feeling the crunch.
In this article, we explore where this pressure is coming from, and why it's a poor reason to rebuild a portfolio you spent decades assembling.
What the 3.5% Is Made Of
According to the Bureau of Labor Statistics, consumer prices rose 3.5% over the 12 months ending in June. Set food and energy aside, and everything else rose 2.6%, close to the Federal Reserve's 2% goal. Almost the entire gap is energy, up 15.7% over the year, with gasoline up 26.7%.
Groceries aren't driving the headline; food at home rose 2.7% over those same 12 months, below the overall rate. The grocery bill is where you feel the pressure, and gasoline is what's moving the index.
Energy affects the price of everything else, which is why it spreads. Diesel fuel moves produce from the field to the store, and natural gas is the raw material for most fertilizer.
The two numbers you're watching are the same number arriving at different speeds: days at the pump and months at the shelf.
Why a Shipping Lane Sets Your Grocery Budget
Most of this year's energy story runs through the Strait of Hormuz, the narrow waterway at the mouth of the Persian Gulf that carries a large share of the world's oil. Shipping there has been disrupted for months, and vessels crossing the strait are being attacked.
Oil has moved with the news. Benchmark U.S. crude surged to a multi-month peak early in the year, cooled off significantly through the summer, and recently dropped further over the course of a single week following reports of diplomatic progress regarding shipping access.
That last move is the part to watch, because it says something about what kind of price this is. A barrel of oil didn't suddenly become much easier to produce in five days. What changed was the level of fear about future supply, and prices built on fear are the kind that unwind. The pump has already begun easing from its mid-summer highs.
Why Economists Are Arguing About the 1970s
The comparison to 1974 runs through most of this summer's coverage, and the distinction matters for how you respond. Jim Paulsen of Paulsen Perspectives has spent the season arguing that the two periods differ at the root.
The 1970s were driven by demand, in his telling: a large generation moving into its peak spending years, met by an economy that couldn't keep up. Inflation of that kind spreads everywhere, takes higher rates and a slower economy to bring down, and can run for years.
A supply shock behaves differently, because one input gets expensive when something interrupts its production or transport, and prices settle as the interruption clears.
What This Means for Your Accounts
Bonds. When inflation runs hot, yields rise and the bonds you already hold lose market value. If this episode proves temporary, much of that move is also, which argues for staggering maturities over one large bet on rates.
Stocks. Higher oil is a cost for most companies and a windfall for a few. If energy holdings are carrying your portfolio, that's diversification doing its job rather than a signal to buy more of what has already run.
Your withdrawal rate. This one gets the least attention and deserves more. If you draw a fixed dollar amount, your purchasing power erodes at the 3.5% headline rate, because fuel and food take up a real share of a retiree's budget and those are the categories the 2.6% figure leaves out.
The Response That Rarely Helps
Redesigning a portfolio around a supply shock is close to the very definition of acting after the fact.
By the time you feel a price at the pump, the market has priced it, and the allocation you'd build would answer a question the world may resolve next month. An oil price that swung more than 7% in a single week makes a poor foundation for a five-year plan.
Ignoring it entirely carries its own cost, though. If higher prices are pushing you to withdraw more from investments during a flat market, that's a genuine planning problem, and the place to look first is your cash reserve rather than your stock holdings.
Why it Matters
The forces setting your grocery bill run through a shipping lane most Americans couldn't find on a map, and nobody forecasts them reliably. What you can control is whether your plan absorbs a year like this one without forcing you to sell something you didn't want to sell.
We use a shorthand at Spain & Smith for what moves markets: EIEIO, for Earnings, Interest rates, Employment, Inflation, and Other.
2026 has been an “O” year, and Other is the category you can’t put on a calendar. For anyone nearing retirement or already there, that's the argument for holding a plan instead of a forecast.
If you've looked at your receipts and wondered whether yours still holds up, let's talk it through.
Call 216-539-0079, email info@spainsmith.com, or get in touch online.
Frequently Asked Questions
Why are gas prices so high in 2026?
Disrupted oil shipping through the Strait of Hormuz is the main driver. Crude traded above $119 a barrel at its March peak before easing to about $78 in early August. The national average for regular gasoline was $4.01 on August 9, roughly 90 cents higher than a year earlier.
Why is my grocery bill going up if inflation is only 3.5%?
Groceries rose 2.7% over the 12 months through June, below the overall 3.5% rate. The larger increase sits in energy, up 15.7%, which raises the cost of growing, moving, and packaging food. You feel it at the register, and the cause is at the pump.
Should I change my investments because oil prices went up?
Rarely. Energy shocks tend to arrive fast and fade, and repositioning after a price has already moved usually locks in the damage. Most diversified portfolios already hold energy. The team at Spain & Smith Wealth Advisors in Pepper Pike, OH, reviews what exposure a client already carries before adding any more.
Is today's inflation like the 1970s?
The difference is in the cause. The 1970s came from demand, with spending outrunning what the economy could produce. This episode comes largely from supply: disrupted shipping, tariffs, and higher oil. Supply-driven inflation usually fades as the disruption clears, while demand-driven inflation can take years.
Should retirees withdraw more from savings when inflation rises?
Timing matters more than the percentage. Raising withdrawals during a flat or falling market compounds the damage to a portfolio. A better first step is checking whether your cash reserve can carry the higher costs for a year, leaving invested assets alone until prices settle.
About Hank
Hank Spain, ChFC®, CLU®, is the Founder of Spain & Smith Wealth Advisors, located in Pepper Pike, Ohio, leveraging over 45 years of financial services experience to provide individuals, families, and business owners with coordinated, long-term planning. Drawing on a robust background at firms like Wells Fargo Advisors and Carnegie Investment Counsel, he specializes in a relationship-driven approach centered on comprehensive financial mapping. Today, his practice is dedicated to helping clients bring greater clarity, alignment, and confidence to their financial lives.
