The OIL SHOCKS That Keeps Destroying Wealth

本站添加: 2026-05-05

[00:00:00]The current shock to oil supplies is among the worst in history. The oil shock.

[00:00:04]>> Oil shock. And this has sent shockwaves through pretty much every other market.

[00:00:09]Everyone's newsfeed [music] is bombarded with this war and the oil crisis that is attached to it. And we're acting like this hasn't happened before.

[00:00:20]The truth is [music] that the Middle East has been a volatile place for a number of decades and this has happened before.

[00:00:28]It happened in the 70s, it happened in the 90s, it happened after the GFC, and it also happened in 2022. Oil shocks aren't a surprise, they [music] repeat and every single time one hits, normal everyday people going about their lives get caught completely off guard. The question isn't so much why is this happening right now? The question is why aren't we ever ready for it?

[00:00:54]Today I'm going to talk about what happened in these oil crises and I'm going to talk about what I've learned in the hope that it will provide a different perspective for people out there and help you make better decisions in these uncertain times.

[00:01:10]All right, let's go back 1973 [music] OPEC. The cartel of Middle Eastern oil producing nations cut supply to the west as a political weapon.

[00:01:20]Overnight the price of oil quadrupled, petrol lines stretched around city blocks, inflation went through the roof, unemployment soared, [music] the entire developed world went into a grinding recession. In Australia, inflation hit 17%. Yes, 17%.

[00:01:37]In fact, I never lived through the 70s, I'm not old enough, but I kind of feel as if this decade has a lot of similarities to what the 70s does. Anyway, moving on 1979 Iranian Revolution, oil prices doubled again, another global recession, more inflation, more rate hikes and more pain.

[00:01:58]1990 Iraq invades Kuwait, oil spikes, Australia slides into what Paul Keating famously called This is a recession that Australia had to have.

[00:02:08][music] And the RBA had to raise rates to 17%.

[00:02:13]If you had a mortgage in Australia in the early 90s, you know exactly what I'm talking about there.

[00:02:17]2008 oil hits $147 a barrel, a record high at the time, then the GFC hits, the whole system convulses. [music] 2022, Russia, Ukraine, global energy markets go haywire, petrol at Australian bowsers hit [music] $2.20 a liter.

[00:02:37]The RBA consequently raised rates 13 times [music] in 18 months.

[00:02:41]And now 2026, Strait of Hormuz, petrol hits $2.50 a liter, the highest we've ever seen.

[00:02:49]Here's what every single one of those moments had in common.

[00:02:52]Oil disruption, price rises across everything, [music] inflation spikes, central banks hike rates, mortgages become more [music] painful, economic growth slows, and a bunch of people get hurt. Every time. Now, look at the numbers we're sitting on right now. Petrol in May 2020 [music] was 98 cents per liter. Now, granted that just came out of the lockdown, [music] so we were at record lows.

[00:03:18]Nevertheless, petrol in March at $2.30, it's gone [music] up since then, but that's 135% increase.

[00:03:26]Groceries, 25 to 30% [music] up since 2021.

[00:03:30]Wages, maybe 15 to 20% in the same time period. So, >> [music] >> the math doesn't work out and the RBA, they're stuck fighting the same inflation [music] it always fights after an oil shock.

[00:03:42]They've forecasted to push the cash rate to 4.6%. That's a 15-year [music] high with cash rates not expected to come back until mid-2027.

[00:03:53]This is not new. This is a pattern that's repeating itself exactly the same way it has the last six or seven times.

[00:04:00]Here's the thing most Australians don't want to hear.

[00:04:04]The economy is never constant. It never stays still.

[00:04:07]>> [music] >> It goes up, it goes down, there's good times, there's not good times.

[00:04:12]It's always done this and [music] it will always do this.

[00:04:16]The problem is Australia has had an extraordinary [music] run of good times from 1991 all the way through to COVID, we went pretty much 30 years without a recession. 30 years, that doesn't happen anywhere [music] else in the developed world. It's quite frankly astonishing and it did something to our psychology.

[00:04:36]We were expecting good times with a default.

[00:04:40]We started building our financial lives around the assumption that interest rates would stay pretty low forever, that petrol would stay cheap, that prices [music] wouldn't spike, that the oil shock we were reading about in the news was someone else's problem, but if you look at the last 50 years, oil shocks have hit roughly every 10 to 15 years. If you're between 35 >> [music] >> and 65, you've personally lived through at least three or four of them.

[00:05:11]There are three things [music] I know about this situation that I think are worth talking about.

[00:05:17]The first thing is that every single [music] person watching this video has their own set of things they need to happen.

[00:05:23]We're all at different stages, different positions financially in life, but everyone needs to keep moving and [music] we need to achieve those things.

[00:05:32]Here's what the GFC era and COVID taught me about how people behave in uncertain times.

[00:05:38]They freeze. The world goes sideways, [music] they hit pause, then 5 years ago I was still talking to customers last year who just woken up to the fact that it'd been 5 years since COVID started. Still in the same financial position, >> [music] >> still with the same plan, they just hadn't moved forward with their lives. I don't believe we can let times like these paralyze us because I've seen what happens when people do that. What happens [music] is because we live a crazy lifestyle, we have little time to reflect [music] and all of a sudden we put things on hold and then 5 years later we realize nothing has happened, we haven't gotten closer to our dreams, we're we're older, our bones are sorer, [music] we're aching just as much as what we did before and we're still carrying the same financial stresses and burdens as what we did before. Look, I complain about Australia a lot, but [music] it's still a place where you can make things happen. It's harder than it was, but those easy times were a mirage anyway.

[00:06:35]Good things are going to take more work now and [music] that's okay. That's how it's supposed to be. Good things are hard to come by.

[00:06:43]The second thing I know is there's always opportunity in disruption.

[00:06:47]Every oil shock I walked you through was followed by a period where people who were positioned well enough made some serious ground. [music] And I'll say something right now which most commentators won't say, I believe rates are going higher regardless of what happens with this [music] war.

[00:07:03]Even if peace broke out tomorrow, we've got a government spending at record levels with no productivity behind it.

[00:07:09]Money is created out of thin air, it's inflationary and that's why we're getting [music] the inflation and we're going to continue to get it. AI, energy transition, believe or agree or disagree, automation, we've got massive disruption coming and where there's massive disruption, there is massive opportunity. The people who come out of this stronger [music] aren't necessarily lucky. Maybe they're just well positioned. The third thing I know, you cannot go after the opportunity if you don't understand the risks.

[00:07:38]I saw this in the GFC, I was working in [music] an affluent part of suburban Melbourne, prices went down 25%. That's house prices, a generational buying opportunity and people froze. Clients I was working with froze, [music] not because they couldn't see it, but because they didn't understand their own risk position well enough to move.

[00:07:59]If I was a betting person, I'd bet the house that if they'd known property prices were going to go up 100 to 200% over the next decade or so, they would have found a way to buy that property.

[00:08:09]Another example, a more recent one. I had a client, months worth of work, pre-approval, equity sorted out, ready to buy that investment property and at the final hurdle, the client comes back to me and goes, "Will, I'm losing 17 grand [music] a year on this property."

[00:08:26]And that's a fair concern. We went through a whole bunch of stuff and what I generally speak about with most of my clients are two things. What's your cash flow like? Do you have enough cash in case of a shock? And are you [music] adequately protected? Like what other risks concern you? And it came about that clients on a dual income, they've got two kids, they've got no income protection. So, they're playing an attacking game, which is fine, but they're not playing any defense [music] or their defense game is not strong.

[00:08:58]If we can round it down, it's a 200 grand a year income.

[00:09:01]If I'm being nice, it's 20 working years. That's a $4 million asset completely unprotected.

[00:09:07]The reason the client is not feeling safe about taking on opportunities is his defense [music] is poor. So, he's going off to do that with an adviser and he feels a lot better about him taking up that opportunity. Most borrowers don't have a big enough cash buffer, they aren't paying debt down fast enough >> [music] >> and they're under-insured.

[00:09:29]Get your risk right first, get your defense right first because if you don't understand your risk, [music] you won't be in a clear mindset to be able to take the opportunities when they're in front of you. Thanks for watching, guys. I hope you liked that. I'd love to hear your thoughts on this stuff. What do you think's going to happen next? It feels like every day our old friend Mr. D.

[00:09:47]Trump [music] comes out with something that's more and more crazy. If you think I can help you with your finances, reach out. Right now I'm helping people lock in fixed [music] interest rates because they're worried about where rates are going to go in the future. I'm helping people get income protection, [music] not that I do that myself. I refer that to qualified partners, but I'm working on how to play defense well with my clients. I'm restructuring loans to [music] minimize payments to access equity so they've got an extra cash buffer in case [music] things get really nasty. That's defense and for the people who want to go on attack, buying investment, I can also help with that, too, but make sure we do it responsibly and make sure defense as well. Hope you like the video. See you around [music] next time.