The continued rise in oil prices has raised concerns about global inflation, which is currently at a high level.
High oil prices increase the input costs of businesses, which in turn forces them to raise prices for consumers. Among other factors, this is one of the reasons for the continued uncertainty that we have recently seen in financial markets, especially the stock market.
tesla
This week, the S&P 500 was largely flat, with yesterday's closing price bringing the index's weekly gain to 0.04%. However, despite the uncertainty and turmoil, a handful of companies in the index performed well this week. Two such companies are Tesla and Chevron, two very different companies that represent two different ways of looking at how high oil prices will affect our energy consumption.
Chevron
On one side is Tesla, undoubtedly the current king of electric vehicle manufacturing. While the S&P 500 has been mediocre this week, Tesla shares are up 8.7 percent.
There is an argument that the higher the price of oil and other fossil fuels, the more attractive electric vehicles are to consumers, and we will see more investment flowing to cleaner energy sources. In other words, high oil prices could accelerate our transition to cleaner energy. Is this possible?
Tesla stock price
While high oil prices may spur growth in demand for electric vehicles, which companies like Tesla will benefit from, it has also increased investment in oil. When oil prices are high, producing oil can make more profits, so oil companies tend to increase drilling and production.
Historically, this has happened again and again. The oil market boomed, production increased, and then, eventually, as supply caught up with demand, dampening prices.
Chevron shares
That's why oil producers like Chevron are also likely to perform well in the current environment. Chevron shares are up 9.8 percent this week.
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