Gas Shortages Are Coming, and Chevron's CEO Says Economies Will Have to Slow. These Consumer Stocks Are Most at Risk.

When you're concerned about something, it's often good to consult someone who knows a lot about it. So if you're concerned about rising gas prices due to the Iran war, and about how the conflict will impact our economy in general, you might want to hear from a bigwig in the energy realm. Enter Chevron (NYSE: CVX) CEO Mike Wirth, who recently issued a warning.

Here's what he said and what it may mean for you.

Image source: Getty Images.

The CEO said...

Most of us are focused on the price of gas (and maybe oil as well), but speaking at the Milken Institute on May 4, Chevron's CEO brought up a related and even more troubling issue.

"We will start to see physical shortages" due to the closure of the Strait of Hormuz, he said, explaining that so far, most of the world hasn't been experiencing major supply issues because the U.S. and others have been tapping surpluses and national strategic reserves -- which are, ultimately, limited.

He further explained that "economies are going to have to slow," since supply will be shrinking, and he suggested that the overall impact of the partial or full blockage of the Strait of Hormuz may be "potentially as big as in the 1970s" -- when OPEC cut off supplies to the U.S. and some other nations, and also reduced its overall production. That embargo led to soaring gas prices and fuel rationing: Those who could get fuel for their vehicles had to wait in extremely long lines at gas stations to buy it. In other words, we are probably looking at some harder times ahead.

The CEO of Shell, Wael Sawan, concurs with Wirth's assessment -- he has noted that the Iran war has already reduced global jet fuel consumption by about 5%, and that shortages of oil and liquefied natural gas might last into next year.

What does an energy shortage mean for your investments?

One likely outcome of an energy shortage is that oil companies -- such as ConocoPhillips, Occidental Petroleum, and Chevron -- will profit from higher prices for their scarcer commodities.

Transportation companies, by contrast, are likely to suffer because of steep fuel costs and perhaps a pullback in demand, with many people choosing to travel less due to the higher costs. We can also anticipate a pullback in consumer demand, which will lead to reduced shipping, rail, and trucking business.

Beyond the obvious impact that they will feel from higher fuel costs, consumer products companies that use plastics in their wares will face surging raw material costs, as most plastics are made from petroleum. Already, Procter & Gamble has warned that the higher oil prices resulting from the Iran war may cost it $1 billion, and that it plans to raise prices to pass some or all of that expense on to consumers.

Companies such as Nike that source inputs globally will probably face supply chain issues and higher prices. And as consumers deal with much higher gas prices, many will probably try to cut back on spending elsewhere, hurting makers of discretionary consumer products such as appliances and apparel. Discount retailers may see more consumers coming to them, but those consumers might be spending less.

Finally, as Wirth also noted last week, the Strait of Hormuz closure has already taken around 1 billion barrels of oil out of the global supply -- equivalent to 10 days' worth of consumption for the whole world -- and the supply shortfall is growing daily. Even after the conflict gets resolved, it will take months for energy market conditions to approach normal.

So be aware: The ongoing war with Iran is likely to affect us, our spending, and our investments for quite a while.

Selena Maranjian has positions in Procter & Gamble. The Motley Fool has positions in and recommends Chevron and Nike. The Motley Fool recommends ConocoPhillips and Occidental Petroleum. The Motley Fool has a disclosure policy.