Oil Interest Rates and Your Business

Nic Lovelace | Sep 16, 2026 2:23 PM

Four Principles for the Months Ahead

By Nic Lovelace | September 16, 2026

The Chamber asked me to connect developments in financial markets with the decisions business owners here are making: what to charge, when to borrow, whether to expand, and how to respond when customers become more cautious.

The purpose of this update is to explain the forces behind those decisions and provide principles you can use as conditions change.

For those I haven’t met, I’m Nic Lovelace, Chief Investment Officer and head trader at AlphaX Capital, a fund with approximately $75 million under management. My office is here at the Chamber.

Over nearly 20 years in the markets, my responsibilities have centered on understanding current conditions, identifying where they may be headed, and making decisions with capital at risk. That requires separating what we know from what we expect—and understanding the consequences if our expectations prove wrong.

That discipline applies to a local business, too.

The four principles behind this update are straightforward:

Understand your customer’s capacity to spend. Essential expenses determine how much flexibility remains.
Account for the time between cause and consequence. Today’s cost change can affect profits months later.
Give fixed obligations a margin for error. Payments remain due when business conditions change.
Make your assumptions explicit. Know what would cause you to adjust your plan.

1. Your customer’s financial condition becomes part of your business’s financial condition

Money spent on one obligation becomes unavailable for another purchase unless income, savings, or borrowing fills the gap.

Consider a family with $800 left each month after its regular bills. Another $200 in essential expenses reduces that remaining money by 25%. Everyone in the household can remain employed while the family becomes substantially more cautious about purchases it can postpone.

That helps explain why an employee may need higher pay at the same time a customer asks for a lower price. The same pressure is reaching your business from two directions.

The Federal Reserve’s latest regional report describes slightly softer consumer spending, rising costs, and continued difficulty finding workers. Those conditions can coexist. Regional Federal Reserve report.

Decision rule: Identify what is preventing the purchase before changing the offer. A customer who needs a smaller project, a later start date, or greater confidence in the estimate presents a different problem from a customer who no longer needs the work.

2. The full effect of a price change takes time to arrive

An increase in oil can first affect your fuel bill, then supplier charges, then the spending decisions of customers absorbing those same increases.

Recent Middle Eastern supply disruptions are adding pressure to energy costs. On September 16, diesel averaged approximately $5.98 a gallon on the Missouri side of the Kansas City metro—about 95 cents higher than a month earlier. Regular gasoline rose about 15 cents over that period. Your exposure depends on the fuel you use and the goods you buy. ABC News, AAA.

For an owner, the vulnerable period can be the gap between promising a price and paying the costs of fulfilling that promise. An estimate that looked profitable when it was written can produce a different result when materials arrive.

The reverse also takes time. Lower oil prices do not immediately replace expensive inventory or replenish a customer’s checking account.

Decision rule: Before making a new price commitment, verify the delivered cost and how long suppliers will honor it. Match the period you guarantee your price to your ability to control the underlying costs.

3. Fixed obligations need a margin for error

Borrowing can help a business become more productive, fulfill orders, or expand. It also commits future cash before that cash has been earned.

For example, a quarter-point increase fully passed through to a variable-rate loan with a steady $100,000 balance would add about $250 a year in interest. An older loan coming due for renewal could face a much larger adjustment.

Interest-rate changes become useful to understand when you connect them to your loan’s reset date, maturity, balance, and payment.

There is also a reason borrowing relief may arrive slowly: higher energy costs can push inflation upward while leaving customers with less to spend. A softer sales environment does not automatically produce lower interest rates.

Decision rule: Evaluate borrowing using terms available today and a reasonable allowance for weaker results. Ask your lender what renewal would cost now. Then determine whether the business can comfortably carry that payment if sales arrive later or expenses run higher than expected.

4. A forecast should come with conditions that would change it

My working expectation for the next one to three months is continued business activity with uneven demand, volatile fuel costs, and pressure on profits. I would plan without assuming quick relief in financing costs.

Over six to twelve months, recovering energy supplies could provide some breathing room. The government’s September outlook anticipated lower crude-oil prices in 2027 as production recovered, while warning of tight diesel supplies. That forecast was prepared before the latest pipeline disruption, so the timing deserves less confidence. EIA outlook.

My assessment would improve as supply disruptions ease, delivered costs stabilize, and customers become more willing to commit. It would become more cautious if persistent energy problems were accompanied by sustained declines in orders and employment.

Those are conditions to observe and respond to.

Decision rule: Test an important commitment against more than one plausible outcome. Does it work at today’s costs? Can you carry it through slower sales or delayed payments? Can you reduce its size or complete it in stages?

Equipment that supports existing, profitable orders may justify moving forward. An expansion that requires cheaper financing and a sharp increase in demand depends on several favorable developments arriving together.

Keeping financial flexibility gives you time to respond—and the ability to take an attractive opportunity when it appears.

The discipline is to understand what drives your results, know which assumptions your commitments depend on, and adjust when the evidence changes. Those principles remain useful through the next Fed decision, the next oil headline, and the next business cycle.