Oil prices and the economy: WTI, Brent, gasoline and inflation

Crude oil is the most important commodity in the world economy. It fuels most transportation, feeds petrochemicals and plastics, and its price passes quickly into gasoline, diesel, jet fuel and airfares. When oil swings, households feel it at the pump within weeks, inflation reports move with it, and central banks have to decide whether to look through the change or respond.

Oil prices are also unusually volatile. In the US Energy Information Administration's monthly series, West Texas Intermediate (WTI) has traded between $11.35 a barrel (December 1998) and $133.88 (June 2008), and it has lost about 70% of its value twice since 2008. Few other prices that matter so much to so many people move that far, that fast.

This guide explains how oil is priced, what WTI and Brent are, how a change in crude works its way into gasoline and the consumer price index, how oil affects growth and stocks, and what four decades of data show, including the large moves of 2026.

How crude oil is priced

Oil is not one product. Crudes differ in density (light or heavy) and sulfur content (sweet or sour), and they sit in different places. Lighter, sweeter crude yields more gasoline and diesel with less refining, so it usually commands a higher price.

To make trading practical, the market relies on benchmarks: specific crude streams at specific delivery points, whose prices other crudes are quoted against.

• West Texas Intermediate (WTI) is a light, sweet US crude priced at the Cushing, Oklahoma, trading hub. It is the reference for US crudes and for imports from Canada, Mexico and South America. NYMEX's light sweet crude futures contract (CL), traded on CME Group, covers 1,000 barrels, so each $0.01 move is $10 per contract.
• Brent is the benchmark for light, sweet crude from the North Sea and the price reference for much of Europe, Africa and parts of Asia.

WTI and Brent usually trade within a few dollars of each other, but the gap changes with transport costs, pipeline capacity out of Cushing and regional supply. The EIA's spot series used in this guide is WTI at Cushing, averaged by month.

Forty years of WTI

The chart shows how rarely oil sits still:

• 1986 to 2003: mostly under $40. The series starts at $22.93 in January 1986 and hits its low of $11.35 in December 1998.
• 2004 to 2008: a run to $133.88 in June 2008, followed by a fall to $41.12 by December 2008, a 69% drop in six months as the financial crisis hit demand.
• 2011 to 2014: roughly $85 to $110, then a collapse from $105.79 (June 2014) to $30.32 (February 2016), −71%, as supply outgrew demand.
• 2020: $16.55 in April as travel stopped, then a recovery to $114.84 in June 2022.
• 2025 to 2026. WTI averaged $65.46 in 2025 and $57.97 in December 2025. In 2026 it went from $64.51 in February to $91.38 in March (+42%) and $102.13 in May, eased to $80.46 in July, and averaged $97.31 in September. The data record the moves; this guide does not assign causes to them.

From crude to gasoline

The EIA breaks the retail price of regular gasoline into four parts. For 2025 it put crude oil at about 51.4%, refining costs and profits at 14.3%, distribution and marketing at 17.8% and federal and state taxes at 16.6%. The federal tax is 18.4 cents a gallon.

In the EIA's weekly series, regular gasoline peaked at $5.01 a gallon in the week of June 13, 2022, and its low since 2020 was $1.77 in the week of April 27, 2020. In 2026 it ran from $2.78 (week of January 12) to $4.50 (week of May 11) and was $4.27 in the week of October 26.

Oil and inflation

Energy enters the consumer price index directly, through gasoline, fuel oil, electricity and natural gas, and indirectly, through transport and production costs that firms pass on. The direct effect is fast and large:

• CPI energy rose 41.5% in the twelve months to June 2022 and fell 18.4% in the twelve months to May 2020.
• In 2026, CPI energy was 23.0% above a year earlier in May and 20.4% above in September, comparing each month with the same month of 2025.

Because energy is so volatile, economists watch core inflation, which excludes food and energy, to judge the underlying trend. The question for a central bank is whether an oil shock stays in energy or spreads into wages and other prices. If it spreads, policymakers are more likely to respond. A sustained oil shock with weak growth is the recipe for stagflation, covered in Stagflation: high inflation, weak growth and the 1970s lesson.

Oil and growth

Higher oil prices work like a tax on oil users and a transfer to oil producers.

• Consumers spend more on fuel and have less for everything else. Lower-income households, which spend a larger share of income on gasoline, feel it most.
• Energy-intensive industries such as airlines, trucking and chemicals face higher costs.
• Producers earn more and tend to drill more, which supports investment and employment in oil regions.

For the United States, the balance has shifted as domestic production grew: more of what consumers pay goes to US producers and workers rather than abroad. For large importers the tax effect dominates. Oil-price spikes have preceded several US recessions, but they have also occurred without one, so a spike on its own is not a reliable recession signal.

Oil and the stock market

The link between oil and stocks depends on why oil moved.

• Demand-driven rises, when a strong economy uses more oil, often come with rising stocks.
• Supply-driven rises, when output is cut or disrupted, raise costs without adding demand and tend to weigh on stocks outside energy.
• Sectors split. Energy producers' earnings rise with oil, while airlines, shippers and consumer companies face higher costs. See Stock market sectors and industries: GICS and sector ETFs explained.

Oil is also priced in dollars, so a weaker dollar tends to make oil cheaper for foreign buyers and can support prices; see The US dollar and exchange rates: indexes, drivers and earnings.

Pitfalls when reading oil data

• Monthly averages hide extremes. April 2020's $16.55 average masks a day of negative futures settlement, and June 2008's $133.88 average sits below the 2008 daily peak, which came in July.
• WTI is not Brent. Global headlines often quote Brent; US gasoline is more closely tied to US crude and refining conditions.
• Year-over-year math cuts both ways. A big rise one year produces large year-over-year inflation, and the same price level a year later produces near-zero energy inflation even if prices stay high.
• Nominal prices. $100 a barrel in 2026 is not the same as $100 in 2008. Adjusting for inflation changes which peaks look extreme.
• Causes need sources. The price series cannot tell you why oil moved. Supply decisions, conflicts, weather and demand all show up as the same line.

Oil compared with related measures

How Finabase does it

Finabase shows oil through futures, not spot prices. The /futures page lists 61 contracts, including WTI crude, Brent, natural gas and RBOB gasoline, each with the day's change, returns from one week to two years and a symbol page with a chart. The energy sector page shows how S&P 500 energy stocks are doing alongside.

Finabase does not publish EIA spot prices, pump prices or CPI data. The WTI history and the gasoline and energy-inflation charts on this page are ours, built from public EIA and BLS data.

Frequently asked questions

What is the difference between WTI and Brent?

Both are light, sweet crude benchmarks. WTI is priced at Cushing, Oklahoma, and anchors US crude prices; Brent comes from the North Sea and anchors prices for much of Europe, Africa and Asia. They usually trade within a few dollars of each other.

How much does a $10 rise in oil add to gasoline?

About 24 cents a gallon in crude cost, because a barrel holds 42 gallons. Pump prices follow with a lag of weeks and not penny for penny, since taxes are fixed per gallon and refining margins move separately.

Do high oil prices cause recessions?

They can contribute, by squeezing consumers and raising costs, and spikes have preceded several US recessions. But oil has also risen sharply without a recession following, so the price alone is not a reliable signal.

Why does inflation fall when oil prices stop rising?

Inflation is measured as the change from a year earlier. Once oil stops climbing, the year-over-year comparison catches up and energy inflation falls toward zero, even if prices stay high.

Summary

Crude oil is priced against benchmarks, mainly WTI at Cushing and North Sea Brent, and it is one of the most volatile prices in the economy: EIA's monthly WTI series spans $11.35 to $133.88, with two falls of about 70% since 2008. Crude was roughly half of the retail gasoline price in 2025, and every $10 a barrel is about 24 cents a gallon. Energy drives the biggest swings in headline CPI, from −18.4% in 2020 to +41.5% in 2022 and about +20% in September 2026. Higher oil taxes consumers and rewards producers, hits stocks differently depending on its cause, and is never self-explanatory: the series shows the moves, and the reasons need their own sources.