In the world of economics, eventually everything is related although some events are easier to see than others. The clearest example is the war in Iran, sent up oil prices.

In an article by Christopher Rugaber of the Associated Press, the largest monthly jump in gas prices in 6 decades caused a sharp spike in inflation challenging for the inflation fighters at the US Federal Reserve and heightening already substantial political hurdles for the White House.

Consumer prices rose 3.3% in March from a year earlier, the Labor Department from 2.4% in February and biggest increase since May 2024. On a monthly basis, prices rose 0.9% in March from February, the biggest increase in 4 years.

The surge in gas prices will stretch the budgets of lower-and middle-income households as it erodes their incomes, making it harder other necessities such as food and rent.

A big question for now is how the oil and gas price shock lasts and whether it will lead to a broader, long-lasting inflation boost, similar to what occurred in the spring of 2022 after Russia invaded Ukraine.

Still how the war and its impact on inflation will play out in the coming months remains highly uncertain.

Industries that depend on oil and gas are paying more, particularly airlines, which have passed on those higher cots to travelers. Fares jumped 2.7% just last month and are 14.9% higher than a year ago. Many delivery services, including UPS and FedEx, have already announced fuel surcharges that have raised shipping costs for businesses and households.

Andy Harig, a VP at the grocery trade group FMI- The Food Industry Association, noted as energy prices increase, the costs associated with producing and delivering food also rise.

If America cut back on spending elsewhere in response to more expensive gas, the economy could slow and unemployment may rise.

According to AAA, gas prices nationwide averaged $4.15 a gallon up from $2.98 a gallon from the day before the war or an increase of 40%.

The last time inflation jumped 9.1%, there were stimulus checks to push up consumer demand, this time around there are no large government stimulus checks expected to spur demand.

Linking to dividend paying stocks, the term everything is interconnected is often used and sometimes it takes time to see everything is connected, however given the prominence of oil and gas in the economy, higher prices to offset the costs quickly show up. In your portfolio, there is an opportunity to benefit from higher oil and gas prices with stocks in the oil and gas business, some of them have been paying dividends for generations, which offset any personal costs.

There are more questions than answers, till the next time – to raising questions.