World Bank Forecasts 24% Surge in Energy Prices by 2026

You’re filling up your tank at the Shell station on Lamar and 15th, watching the numbers climb—$3.89, $3.92, $3.95—while the radio in your Ford F-150 crackles with another headline about missile strikes in the Strait of Hormuz. By the time you pull into the HEB parking lot on South Congress, the same story is scrolling across the gas-price ticker: energy costs are about to jump another 24 % this year, the highest since Russia rolled into Ukraine in 2022. That’s not just a headline. it’s the new math for every Austin commuter, every small-business owner on Burnet Road, and every farmer out in Hays County who’s already stretching a fertilizer budget thinner than Texas toast.

The World Bank’s latest Commodity Markets Outlook, released this Tuesday, doesn’t pull punches. Attacks on energy infrastructure and the near-paralysis of the Strait of Hormuz—where 35 % of the world’s seaborne crude still flows—have carved a 10-million-barrel-per-day hole in global supply. Even if the worst disruptions ease by May and shipping lanes reopen by late 2026, Brent crude is now expected to average $86 a barrel, a sharp 25 % leap from last year’s $69. For Austinites already shelling out $4.20 a gallon, that translates to roughly another 30 cents at the pump by summer, and another $18 tacked onto the average monthly household fuel bill.

But the ripple doesn’t stop at the gas station. The same report projects fertilizer prices to spike 31 %, driven by a 60 % surge in urea costs. For Central Texas farmers who rely on the Lower Colorado River Authority’s irrigation canals and the Texas A&M AgriLife Extension’s soil-testing labs, that’s the difference between planting a full corn crop or leaving fields fallow. The World Food Programme warns that if the conflict drags on, up to 45 million more people could face acute food insecurity this year—including families right here in Travis County who already visit the Central Texas Food Bank’s mobile pantries twice a month.

And it’s not just food and fuel. Base metals—aluminum, copper, tin—are hitting all-time highs, fueled by demand from Tesla’s Gigafactory just east of Austin, the city’s booming data-center corridor along MoPac, and the solar farms sprouting across the Hill Country. Precious metals are following suit; gold and silver prices are forecast to jump 42 %, as investors from downtown high-rises to Round Rock retirement accounts seek safe havens. That volatility is already showing up in local pawn shops on Airport Boulevard, where the price of a 1-ounce gold eagle coin has climbed $80 in the last six weeks.

The broader economic forecast is sobering. Developing economies are expected to grow only 3.6 % in 2026, a downgrade of 0.4 percentage points since January. Inflation in those countries is now projected at 5.1 %, a full point higher than pre-war estimates. For Austin, a city where 22 % of jobs are tied to trade, transportation, and utilities—sectors directly exposed to commodity prices—that means slower hiring at the Port of Austin’s logistics hubs, tighter margins for the tech startups clustered around the Domain, and longer waits for permits at the city’s Development Services Department.

Indermit Gill, the World Bank’s chief economist, sums it up bluntly: “The war is hitting the global economy in cumulative waves: first through higher energy prices, then higher food prices, and finally, higher inflation, which will push up interest rates and make debt even more expensive.” For Austin’s small-business owners—think the food trucks on Rainey Street, the boutique breweries in East Austin, the HVAC contractors servicing the suburbs—those waves are already lapping at their doorsteps. Higher diesel prices mean higher delivery costs; higher copper prices mean pricier air-conditioning repairs; higher interest rates mean tougher loan terms for the next expansion.

The report also sketches a darker scenario: if critical oil and gas facilities suffer more damage and exports remain sluggish, Brent could average $115 a barrel in 2026. That would push inflation in developing economies to 5.8 %, a level not seen since 2022. For Austin, that could mean another round of price hikes at the grocery store, another dip in discretionary spending at South Congress’s boutiques, and another squeeze on the city’s affordable-housing bonds, which are already struggling to keep pace with rising construction costs.

Ayhan Kose, the World Bank’s deputy chief economist, urges governments to resist broad fiscal support that could distort markets. Instead, he advocates for rapid, targeted aid to the most vulnerable households. That’s a playbook Austin has used before—think the city’s utility-bill assistance programs, the Travis County emergency rental relief fund, and the Central Texas Workforce Solutions’ rapid-response training for displaced workers. But with the city’s budget already stretched by infrastructure projects like the Project Connect light-rail expansion and the ongoing recovery from last year’s winter storm, the question isn’t just how to help, but how to pay for it.

Historically, Austin has weathered energy shocks better than most Texas cities, thanks to its diversified economy and strong tech sector. But this time, the shock is layered on top of a regional drought that’s already cut water allocations to farmers, a state legislature that’s rolled back some renewable-energy incentives, and a housing market where the median home price has climbed 12 % in the last year alone. The cumulative effect is a city where the cost of living is rising faster than wages for the first time since the 2008 financial crisis.

For the 18,000 students at the University of Texas at Austin, that means higher costs for everything from ramen to rent. For the 12,000 employees at Dell Technologies’ Round Rock campus, it means tighter budgets for commutes and childcare. And for the 45,000 workers in Austin’s construction industry—many of whom are already grappling with higher material costs—it means another hurdle in a sector that’s seen project delays and cancellations rise 15 % since January.

The World Bank’s data also highlights a less visible but equally critical trend: the spillover effects of oil-price volatility. A 1 % decline in oil production due to geopolitical risk pushes prices up by an average of 11.5 %, and those effects ripple into natural gas and fertilizer markets with a lag of about a year. For Austin, that means the pain at the pump today could translate into higher heating bills next winter and pricier grocery staples by next spring. The city’s Office of Sustainability has been pushing for more electric-vehicle charging stations and microgrids, but those solutions take time—and time is a luxury Austin may not have if the conflict in the Middle East escalates further.

So what does this mean for you, the Austin resident trying to make ends meet while still enjoying the occasional breakfast taco at Veracruz All Natural? It means the next few months will require a mix of short-term adjustments and long-term planning. It means paying closer attention to the city’s utility-assistance programs, exploring carpooling options through the Capital Area Metropolitan Planning Organization’s rideshare incentives, and maybe even dusting off that old bike in the garage. It also means supporting local farmers’ markets—like the one at Mueller Lake Park on Sundays—where prices are less tied to global commodity swings.

And if you’re a business owner, it means revisiting your supply chains, renegotiating contracts, and looking into energy-efficient upgrades that could qualify for Austin Energy’s rebates. For the city’s tech sector, it’s an opportunity to double down on innovation—whether that’s developing more efficient battery storage solutions or creating software that helps tiny businesses optimize their energy use.

The Local Ripple Effect: How Austin’s Key Sectors Are Bracing for Impact

1. Transportation and Logistics: The Domino Effect on Deliveries

Austin’s position as a logistics hub—anchored by the Port of Austin, the Union Pacific rail yard near Manor, and the sprawling distribution centers along I-35—makes it particularly vulnerable to energy-price shocks. The city’s transportation sector employs over 50,000 people, many of whom are already feeling the pinch. Trucking companies like Central Freight Lines, which operates a major terminal on Burleson Road, have seen fuel surcharges rise from 22 % to 31 % in the last three months. For local delivery services—think Favor, DoorDash, and the city’s fleet of food trucks—those surcharges are passed directly to consumers, adding another $1.50 to $3 to the average order.

The Austin Independent School District, which operates 120 school buses, is also bracing for impact. The district’s transportation budget is already stretched thin, and higher diesel prices could force cuts to after-school programs or extracurricular activities. Meanwhile, Capital Metro, the city’s public transit agency, is exploring ways to offset rising fuel costs, including expanding its electric-bus fleet and offering more off-peak discounts to encourage ridership.

2. Agriculture and Food Production: The Fertilizer Squeeze

Central Texas’s agricultural sector, which contributes $1.2 billion annually to the regional economy, is facing a double whammy: higher fuel costs for irrigation and higher fertilizer prices for crops. The Lower Colorado River Authority, which manages water resources for the region, has already warned farmers that allocations could be cut by 10 % this year if drought conditions persist. Now, with urea prices projected to jump 60 %, many farmers are considering switching to less fertilizer-intensive crops like sorghum or sunflowers—or leaving fields unplanted altogether.

The impact will be felt far beyond the farm. Austin’s thriving local-food scene—from the farmers’ markets at Republic Square to the farm-to-table restaurants on East 11th Street—relies on a steady supply of locally grown produce. Higher input costs mean higher prices for consumers, and for the city’s food banks, which serve over 50,000 people a month, that could mean longer lines and more families in need.

3. Construction and Real Estate: The Hidden Cost of Building

Austin’s construction industry, which employs over 45,000 workers, is already grappling with higher material costs. The price of copper, a critical component in electrical wiring and plumbing, has climbed 20 % in the last six months, while aluminum—used in everything from window frames to HVAC systems—is up 15 %. For developers, that means higher costs for new projects, which are often passed on to buyers in the form of higher home prices or rent increases.

The city’s affordable-housing crisis could worsen as a result. The Austin Housing Finance Corporation, which funds affordable-housing projects, is already facing a $50 million shortfall due to rising construction costs. Higher interest rates—driven in part by global inflation—could further slow the pace of new development, leaving more families priced out of the market. For renters, that could mean fewer options and higher rents, particularly in rapidly gentrifying neighborhoods like East Austin and Montopolis.

What You Can Do: A Local Resource Guide for Austin Residents

Given my background in economic journalism and my work covering the intersection of global markets and local communities, I’ve seen how these kinds of shocks play out on the ground. If you’re feeling the squeeze in Austin, here are the three types of local professionals Consider consider connecting with—and exactly what to look for when hiring them.

1. Energy Efficiency Consultants: The Hidden Savings Experts

These professionals specialize in helping homeowners and businesses reduce their energy consumption—and their bills. In Austin, where air conditioning accounts for nearly 30 % of a household’s energy use, even small upgrades can add up to big savings.

What to look for:

• Certification from the Building Performance Institute (BPI) or the Residential Energy Services Network (RESNET).
• Experience with Austin Energy’s rebate programs, which offer incentives for everything from insulation upgrades to solar panel installations.
• A track record of working with local contractors who can perform the recommended upgrades.
• Familiarity with the city’s climate action plan, which aims to make Austin carbon-neutral by 2040.

Start by asking for a home energy audit, which typically costs between $200 and $500 but can identify savings of up to 30 % on your utility bills. Austin Energy offers a list of approved contractors who can perform these audits.

2. Financial Planners with a Focus on Inflation Hedging

With inflation expected to remain elevated, protecting your savings and investments is more important than ever. A financial planner who understands the unique challenges of Austin’s economy—from the city’s high cost of living to its volatile real estate market—can help you navigate these uncertain times.

What to look for:

• Certification as a Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA).
• Experience working with clients in Austin’s tech sector, where stock options and RSUs are common.
• A focus on inflation-resistant investments, such as Treasury Inflation-Protected Securities (TIPS), real estate, or commodities.
• Knowledge of local resources, like the Travis County Tax Office’s property tax relief programs for seniors and disabled residents.

Look for planners who offer a free initial consultation and who are fiduciaries—meaning they’re legally obligated to act in your best interest. The CFP Board’s website is a good place to start your search.

3. Small-Business Advisors Specializing in Supply Chain Resilience

If you’re a small-business owner in Austin, the current energy and commodity price shocks could disrupt your supply chain, increase your costs, and squeeze your margins. A business advisor with experience in supply chain management can help you identify vulnerabilities and develop strategies to mitigate risk.

What to look for:

• Certification from the Association for Supply Chain Management (ASCM) or the Institute for Supply Management (ISM).
• Experience working with Austin’s diverse business community, from food trucks to tech startups.
• A focus on local sourcing and regional partnerships, which can reduce reliance on global supply chains.
• Knowledge of the city’s small-business resources, such as the Austin Small Business Program and the Small Business Development Program.

Start by asking for a supply chain audit, which can identify potential bottlenecks and recommend alternative suppliers or inventory strategies. The Austin Chamber of Commerce offers workshops and networking events where you can connect with these professionals.

Finally, don’t underestimate the power of community. Austin has a long history of resilience, from weathering the 2008 financial crisis to rebuilding after the 2021 winter storm. Local organizations like the Neighborhood Partnering Program and the Volunteer and Engage Program offer opportunities to connect with neighbors, share resources, and support one another through tough times. Whether it’s carpooling to work, starting a community garden, or simply checking in on an elderly neighbor, every small action adds up.

Ready to uncover trusted professionals? Browse our complete directory of top-rated business experts in the Austin area today.