Back in March, CNN ran a headline designed to rattle anyone with a 401(k) and a gas tank.
“Global Oil Price Stuck In Triple Digits. Goldman Sachs Says It May Stay There For Years.”
Cue the doom loop. Cue the gas-pump panic. Cue the cable hosts asking whether $150 crude is right around the corner.
What’s The Big Skinny? I spent the better part of an hour in studio with E.J. Antoni – Chief Economist at The Heritage Foundation, Senior Fellow at Unleash Prosperity, BLS nominee, and the only economist I know who shows up to my studio in a three-piece suit. The takeaway? Goldman has the headline half right and the trade dead wrong. [Watch the full conversation here].
.1 Headline.
Everyone’s convinced oil prices will collapse right back down to pre-war levels once the Strait of Hormuz reopens.
Not so fast, says Antoni.
Why? Because the Iran War wiped out roughly a fifth of global oil supply overnight. To plug that hole, the world tore through strategic reserves at a breakneck pace.
Plus, critical production infrastructure was destroyed. For example, a Qatari field is reportedly three years out from pre-war production.
So, supply is wrecked. That much, CNN and Goldman get right.
What they’re missing though is the morphology of the shock. As Antoni put it:
“Prices have not exploded today as if you got rid of 20% of the world’s oil supply because you’ve replaced it with something else. But at the same time, prices are then not going to come back down as quickly. Because now you’re just going to have to replace that supply.”
Translation? The negative supply shock is morphing into a positive demand shock. Same upward pressure on prices. But a slow bleed, not a vertical moonshot, and not the triple-digit forever Goldman is selling.
Now consider what nobody on financial TV is talking about – the petroleum byproducts whose shortages are slowly metastasizing into price hikes in the real economy:
Fertilizer: Nine out of 10 American farmers in the latest sentiment survey said they can’t get enough of it. Lower autumn yields equal higher food prices right around the corner.
Helium: Stores for only ~45 days. Critical to semiconductor fabrication. No strategic stockpile exists.
Chemical stocks: Sulfur, sulfuric acid, glycols, silicon – the unsung inputs feeding fertilizer, plastics, pharma and semis. Antoni says they’ve “already gone through the roof.”
This isn’t a price spike. It’s a slow-bleed pass-through. The consumer hasn’t felt the brunt of it yet, according to Antoni. And it’s coming at the worst possible time…
.1 Chart.
Forget the $100 chyron. This is the chart that should keep every household up at night.
Look at that reversal.
Real average weekly earnings finally clawed back into positive territory at the start of this year, clocking year-over-year increases of +1.5% in February 2026 and +0.1% in March. Then the line snapped, logging a -0.2% drop in April.
According to Antoni, a long list of consumer staples – fruits, vegetables, even utility bills – were actually set to decline into summer and autumn.
All that progress is now toast. Fertilizer alone will undo months of supply-chain healing as it grinds through the food system.
The kicker? Wage growth won’t easily return. Not with Fed economists pegging break-even job creation as low as 0–30,000 a month under the new immigration regime.
So headline wages stay flat and real wages – what your paycheck buys at the pump and the grocery store – stays in reverse.
While Goldman’s triple-digit-forever line is wrong, the affordability damage CNN is hinting at? Very, very real.”
.1 Investment Insight.
Buy Refiners. Fade Drillers. Or Just Own Both.
This is where Wall Street’s reflex breaks down.
The Pavlovian reaction to a price spike is to back up the truck on oil and gas producers – drillers, explorers, anybody with a rig in the Permian. Big mistake.
Here’s the rub — producers can’t flip the switch.
Antoni rightly brought up the latest Dallas Fed Energy Survey. The median projection from the drillers themselves is that oil ends the year with a seven handle. Not a hundred. Seventy-something.
Yet, the break-even price to drill a new well in the Permian Midland just climbed from $61 to $69 between the March 2026 and April 2026 Dallas Fed reports.
That means the producers are telling us – based on their own data – that they won’t ramp output unless prices stay elevated for the long haul. And they don’t believe they will.
That leads us to the opportunity. When it comes to oil refiners, we’re talking about completely favorable dynamics in the current market, including:
Pricing power: Their products are price inelastic. You’re filling your tank either way. They pass costs straight to the next link in the chain.
Longer lead time: Refiners get advance warning on quantity changes. Drillers don’t. That gives refiners room to adapt.
Crack-spread leverage: When crude rises and gasoline lags, the spread widens. That’s pure margin expansion for refiners.
After speaking with Antoni, I’m convinced this is the energy trade for the back half of 2026.
You’ll recall I’ve been banging the table on the Energy Select Sector SPDR Fund $XLE ( ▲ 0.97% ) since the middle of last year. It’s performed impressively, up nearly 30% year-to-date.
But it’s weighted ~40% to oil producers and only about 10% to refiners. That means its future performance won’t be leveraged enough to the favorable market dynamics for refiners.
Instead of bailing on the XLE trade, which still boasts favorable long-term fundamentals, it’s smarter to consider one of the following:
Add to your energy exposure by buying one of the three largest U.S. independent refiners: Valero $VLO ( ▲ 5.21% ) Marathon Petroleum $MPC ( ▲ 2.86% ) or Phillips 66 $PSX ( ▲ 1.85% ).
Hit the easy ETF button: Instead of cherry-picking the best refiner, own the entire space with the VanEck Oil Refiners ETF $CRAK ( ▲ 1.56% ). It provides investors with easy exposure to 31 compelling refining opportunities in a single purchase.
The Big Skinny: Goldman’s “triple digit oil forever” call is overcooked. But Antoni’s knock-on inflation thesis is dead on and it’s coming for real wages, food, plastics and pharma. We can look to soften the price increase blow by owning more refiners, who stand to benefit the most.
.Before You Run….
Don’t miss the full episode here: Including EJ’s shocking revelation about the Fed’s 2% inflation target.
Follow EJ on X.
Catch The Big Skinny - LIVE: This Thursday at 5pm ET, we’re interviewing a top chip expert from AMD, plus welcoming Josh Schafer from Barron’s.
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