October 23, 2025 • 7 mins
If we can hold the price of oil near $57, it’s an annualized savings of about $2,500 for the average household over the $78 oil that President Trump inherited. The relief at the pump is quick. The relief in other aspects of the economy obviously isn’t.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
You have questions, Brian has answers. It's time for today's
Q and A of today.
Speaker 2 (00:10):
This is the Brian Mud Show.
Speaker 1 (00:13):
Today's Q and A the inflation impact of oil.
Speaker 2 (00:16):
This is brought to you by Melisten Ashes check Mark Collections.
Each day a feature a listener question that is said
by one of these methods. You may email me Brian
Mudd at iHeartMedia dot com, hit me up on social
at to Brian Mud Radio.
Speaker 1 (00:28):
We also use the iHeartRadio talk pack feature. We love it.
If you'd love us, just go into the app.
Speaker 2 (00:33):
Make us your number one pre set, make the Bran
munch A podcast number two pre set. While you're in there,
look for the little microphone button. See it, Tappy. You
may lay down a message right there, maybe for a
future Q and A just like this one.
Speaker 1 (00:46):
Hey Brian, Hey Joel love the show.
Speaker 3 (00:48):
As always a quick question, when we look at the
price of gasoline and it's historic low numbers, my question
is why does that defy logic with inflation when you
compare it to other areas of the market.
Speaker 2 (01:07):
Okay, so it's a great question, and my recent analysis
on this topic included this The price of oil on
President Trump's first day back in office was seventy eight
dollars per barrel. What this means is that his policies
have led to a twenty seven percent price decrease in
this single most important commodity, and becoming us energy independent
(01:29):
is a huge part of that. Again, we are not
relying on for an energy and we can do things domestically.
There's so much less costs associated with that for so
many different reasons.
Speaker 1 (01:37):
And as you're.
Speaker 2 (01:38):
Starting to see the effects of the pump, the impact
will soon begin to be felt at the manufacturing and
wholesale level, in addition to the immediate impact within the
transportation sector.
Speaker 1 (01:49):
So about that.
Speaker 2 (01:50):
In addressing today's question regarding the seeming disconnect between the
price of oil and gas and the costs of other goods,
the first explanation is going to be the most obvious.
The price of oil is obviously most directly related to
the price of gasoline, as fifty two percent of the
cost of gas is directly a result of the cost
of the commodity itself. Additionally, about another fifteen percent of
(02:14):
the cost is related to the transportation of that refined gasoline,
which is also directly influenced by fuel costs. Also, in
addition to gas having the most direct price impact from
oil of any consumer good, the turnaround time weighs in
heavily as well as to why you see it when
you aren't seeing it elsewhere. From the time a barrel
(02:35):
of domestic oil is purchased for delivery. The typical turnaround
time for delivery as gasoline and gas stations is only
about fourteen days, and it can actually happen in as
few as ten days. So, for example, the gas you
buy today was refined from oil that was purchased at
about sixty bucks of barrel, give or take a couple
(02:57):
of weeks ago after a two day rally, by the way,
is back above fifty eight dollars most recently, but anyway,
the benefit in other aspects of the supply chain can
take much longer to see. Here's an idea of these
supply chain implications. The manufacturing date of an average item
on a store shelf varies widely depending on the product type,
(03:20):
supply chain shelf life. So here's a breakdown based on
common categories. You have what are known as non perishable goods.
These are your canned foods, your dry goods. They are
typically manufactured anywhere from six months all the way to
two years before reaching the shelf. Good Joel's laughing. Perishable goods.
(03:43):
These are the ones that spoil quickly. We're talking about
dairy bread. Those types of things usually made just days
to two weeks before. Milt might be bottled one of
two weeks before, while bread could be baked one to
three days before being delivered. Packaged necks. These go in
(04:04):
the categories of things like chips and cookies. Those those
they are often manufactured one to six months before they're
on store shelves, with lives of up to six to
twelve months. Then you have electronics or durable goods like
small appliances. These are made about six months up to
(04:29):
two years prior to delivering stores, depending on production cycles
and inventory turnover. And then you have clothing or textiles.
They are often produced anywhere from three months at the
early end, all the way to eighteen months before as
fashion seasons kind of dry production schedules. So, in other words,
it takes a while for the impact of energy costs
(04:51):
to be felt when you're buying stuff at the store,
at least this side of the perishable goods. Although the
direct impact on them by energy costs is also lower
because you're not talking about items that are as heavily refined.
Speaker 1 (05:02):
Right when you're talking about milk, for example.
Speaker 2 (05:04):
Pasteurized cal pasteurization, boom to the store. That's how that goes,
and so there's you do see the impact in those
items more quickly, but there's also less energy involved in
the process with them. So what this means is that
the only immediacy for things that for most of the
(05:25):
stuff that you're going to buy in the store, would
come from potential relief and transportation costs. But here's the
thing about transportation costs. First of all, for the average
item you buy in a store, it only makes up
about three percent of the total cost of what you're
paying for, so it can be a very small number.
And then immediate relief you're not going to see that
(05:48):
that would only be seen by the transportation companies themselves. See,
most distribution and transportation contracts are agreed to over longer terms,
so there is pricing consistency and Businessines says, retailers can
understand what it is that their obligation is going to
be to be able to price items. Usually you have
(06:09):
a minimum of six months at a time, all the
way to one to three year terms for transportation contracts
to give you an idea, Currently about sixty five percent
of all consumer goods are transported via contracts that are
over one year in length. So this breakout shows just
(06:29):
how sticky higher energy prices can be at the same time,
if we sustain prices at lower levels. It also shows
what the future could be with lower transportation costs going forward,
but again that will take time. If we can hold
the price of oil in the vicinity of fifty seven dollars,
it's an annualized savings of about twenty five hundred dollars
(06:50):
for the average household over the seventy eight dollars oil
that President Trump inherited. The relief at the pump is quick.
The relief in other aspects of the economy obviously isn't
You have questions, Brian has answers. It's time for today's
Q and A of today.
Speaker 2 (00:10):
This is the Brian Mud Show.
Speaker 1 (00:13):
Today's Q and A the inflation impact of oil.
Speaker 2 (00:16):
This is brought to you by Melisten Ashes check Mark Collections.
Each day a feature a listener question that is said
by one of these methods. You may email me Brian
Mudd at iHeartMedia dot com, hit me up on social
at to Brian Mud Radio.
Speaker 1 (00:28):
We also use the iHeartRadio talk pack feature. We love it.
If you'd love us, just go into the app.
Speaker 2 (00:33):
Make us your number one pre set, make the Bran
munch A podcast number two pre set. While you're in there,
look for the little microphone button. See it, Tappy. You
may lay down a message right there, maybe for a
future Q and A just like this one.
Speaker 1 (00:46):
Hey Brian, Hey Joel love the show.
Speaker 3 (00:48):
As always a quick question, when we look at the
price of gasoline and it's historic low numbers, my question
is why does that defy logic with inflation when you
compare it to other areas of the market.
Speaker 2 (01:07):
Okay, so it's a great question, and my recent analysis
on this topic included this The price of oil on
President Trump's first day back in office was seventy eight
dollars per barrel. What this means is that his policies
have led to a twenty seven percent price decrease in
this single most important commodity, and becoming us energy independent
(01:29):
is a huge part of that. Again, we are not
relying on for an energy and we can do things domestically.
There's so much less costs associated with that for so
many different reasons.
Speaker 1 (01:37):
And as you're.
Speaker 2 (01:38):
Starting to see the effects of the pump, the impact
will soon begin to be felt at the manufacturing and
wholesale level, in addition to the immediate impact within the
transportation sector.
Speaker 1 (01:49):
So about that.
Speaker 2 (01:50):
In addressing today's question regarding the seeming disconnect between the
price of oil and gas and the costs of other goods,
the first explanation is going to be the most obvious.
The price of oil is obviously most directly related to
the price of gasoline, as fifty two percent of the
cost of gas is directly a result of the cost
of the commodity itself. Additionally, about another fifteen percent of
(02:14):
the cost is related to the transportation of that refined gasoline,
which is also directly influenced by fuel costs. Also, in
addition to gas having the most direct price impact from
oil of any consumer good, the turnaround time weighs in
heavily as well as to why you see it when
you aren't seeing it elsewhere. From the time a barrel
(02:35):
of domestic oil is purchased for delivery. The typical turnaround
time for delivery as gasoline and gas stations is only
about fourteen days, and it can actually happen in as
few as ten days. So, for example, the gas you
buy today was refined from oil that was purchased at
about sixty bucks of barrel, give or take a couple
(02:57):
of weeks ago after a two day rally, by the way,
is back above fifty eight dollars most recently, but anyway,
the benefit in other aspects of the supply chain can
take much longer to see. Here's an idea of these
supply chain implications. The manufacturing date of an average item
on a store shelf varies widely depending on the product type,
(03:20):
supply chain shelf life. So here's a breakdown based on
common categories. You have what are known as non perishable goods.
These are your canned foods, your dry goods. They are
typically manufactured anywhere from six months all the way to
two years before reaching the shelf. Good Joel's laughing. Perishable goods.
(03:43):
These are the ones that spoil quickly. We're talking about
dairy bread. Those types of things usually made just days
to two weeks before. Milt might be bottled one of
two weeks before, while bread could be baked one to
three days before being delivered. Packaged necks. These go in
(04:04):
the categories of things like chips and cookies. Those those
they are often manufactured one to six months before they're
on store shelves, with lives of up to six to
twelve months. Then you have electronics or durable goods like
small appliances. These are made about six months up to
(04:29):
two years prior to delivering stores, depending on production cycles
and inventory turnover. And then you have clothing or textiles.
They are often produced anywhere from three months at the
early end, all the way to eighteen months before as
fashion seasons kind of dry production schedules. So, in other words,
it takes a while for the impact of energy costs
(04:51):
to be felt when you're buying stuff at the store,
at least this side of the perishable goods. Although the
direct impact on them by energy costs is also lower
because you're not talking about items that are as heavily refined.
Speaker 1 (05:02):
Right when you're talking about milk, for example.
Speaker 2 (05:04):
Pasteurized cal pasteurization, boom to the store. That's how that goes,
and so there's you do see the impact in those
items more quickly, but there's also less energy involved in
the process with them. So what this means is that
the only immediacy for things that for most of the
(05:25):
stuff that you're going to buy in the store, would
come from potential relief and transportation costs. But here's the
thing about transportation costs. First of all, for the average
item you buy in a store, it only makes up
about three percent of the total cost of what you're
paying for, so it can be a very small number.
And then immediate relief you're not going to see that
(05:48):
that would only be seen by the transportation companies themselves. See,
most distribution and transportation contracts are agreed to over longer terms,
so there is pricing consistency and Businessines says, retailers can
understand what it is that their obligation is going to
be to be able to price items. Usually you have
(06:09):
a minimum of six months at a time, all the
way to one to three year terms for transportation contracts
to give you an idea, Currently about sixty five percent
of all consumer goods are transported via contracts that are
over one year in length. So this breakout shows just
(06:29):
how sticky higher energy prices can be at the same time,
if we sustain prices at lower levels. It also shows
what the future could be with lower transportation costs going forward,
but again that will take time. If we can hold
the price of oil in the vicinity of fifty seven dollars,
it's an annualized savings of about twenty five hundred dollars
(06:50):
for the average household over the seventy eight dollars oil
that President Trump inherited. The relief at the pump is quick.
The relief in other aspects of the economy obviously isn't
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