Indiana Trust Wealth Management
Investment Advisory Services
by Clayton T. Bill, CFA
Vice President, Director of Investment Advisory Services

  • The U.S. equity market, represented by the S&P 500 index, fell 1.9% this week.
  • High oil prices will shift income from US consumers to US energy producers. The situation may accelerate US business investment in traditional and renewable energy infrastructure.

Global capital markets continue to be hyper-fixated on the price of crude oil. The longer the Strait of Hormuz is effectively closed, the longer it will take for oil and gas markets to normalize. High oil prices may be around for a while.

In the past, this would have meant a windfall for oil producers in the Middle East and elsewhere, and the US trade deficit would expand. Times have changed. Higher energy prices are no longer bad for everyone in the US. The US has become the largest oil producer on the planet and is a net exporter of petroleum products. ConocoPhillips’ stock, the largest independent domestic exploration and production firm, is up 34% year-to-date.

Higher oil prices will lead to a transfer of income from households to producers within the US – an internal transfer. Stock market returns of these sectors show that there are winners and losers associated with higher oil prices. Generally, energy firms benefit at the expense of consumers.


Source: Sam Ro, Goldman Sachs Investment Research, March 17, 2026

One potential outcome of higher oil prices may be increased investment by domestic energy companies. For this to occur, oil prices would need to be expected to be elevated for some time to induce US producers to deploy capital. Recent events may drive more widespread investment in renewable sources of energy, as well.

Capital investment – either in physical capital such as oil rigs or intangible capital such as patents on battery technology – has historically been the most important source of US corporate profits.

It is simplistic to say that high oil prices will be an unalloyed good thing for the US economy or energy firms. It is complicated. Oil is used to make plastics, fertilizer, and numerous other products. Transportation costs are set to rise. There is concern about rising inflation, amongst other second-order effects. Yet there may also be medium-term outcomes which create opportunities for capital formation, and which bolster corporate profits.

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