Understanding the Impact of High Inflation: Insights for Devon Energy Employees and Retirees

Healthcare Provider Update: Healthcare Provider for Devon Energy: Devon Energy Corporation partners with Aetna as its healthcare provider. Aetna offers a range of health plans and services to support the wellness needs of Devon Energy employees and their families. Potential Healthcare Cost Increases in 2026: As healthcare costs continue to rise, Devon Energy could see significant increases in employee healthcare expenses in 2026, attributed in part to anticipated premium hikes associated with the Affordable Care Act (ACA). With some states preparing for rate increases of up to 66% and the expiration of enhanced federal premium subsidies, employees may face out-of-pocket premium escalations of over 75%. The confluence of rising medical costs and changes in healthcare policy may necessitate adjustments in how both employers and employees plan for their health coverage, prompting a careful re-evaluation of benefit strategies in the coming year. Click here to learn more

The surge in energy sector valuations driven by the Q1 2026 Middle East crisis has created new urgency for Devon Energy professionals to review estate planning documents, beneficiary designations, and trust structures as asset values shift significantly.

In Q1 2026, Brent crude has surged to approximately ~$107/barrel and WTI to ~$94/barrel, as the ongoing Middle East conflict has restricted critical energy supply routes and strained global petroleum inventories.

Global LNG markets face acute stress in March 2026: Henry Hub is near ~$2.94/MMBtu while European TTF has climbed to approximately ~$16.90/MMBtu, as disruption to Strait of Hormuz tanker traffic has severed key LNG supply corridors.

The historic Q1 2026 energy rally underscores the importance of proactive estate planning — Devon Energy employees whose net worth has increased substantially should consider consulting with an estate attorney to ensure their plan reflects current elevated asset levels.

In March 2022, the Consumer Price Index for All Urban Consumers (CPI-U), the most common measure of inflation, rose at an annual rate of 8.5%, the highest level since December 1981. ¹  It's not surprising that a Gallup poll at the end of March found that one out of six Americans considers inflation to be the most important problem facing the United States. ² 

When inflation began rising in the spring of 2021, many economists, including policymakers at the Federal Reserve, believed the increase would be transitory and subside over a period of months. The inflation surge ultimately proved more stubborn than expected. It is helpful to understand the forces behind those rising prices, the Fed's response to combat them, and how the situation ultimately resolved.

 

Hot Economy Meets Russia and China
The fundamental cause of rising inflation continues to be the growing pains of a rapidly opening economy — a combination of pent-up consumer demand, supply-chain slowdowns, and not enough workers to fill open jobs. Loose Federal Reserve monetary policies and billions of dollars in government stimulus helped prevent a deeper recession but added fuel to the fire when the economy reopened.

 

The Russian invasion of Ukraine placed additional upward pressure on already high global fuel and food prices. ³  At the same time, a COVID resurgence in China led to strict lockdowns that closed factories and tightened already struggling supply chains for Chinese goods. The volume of cargo handled by the port of Shanghai, the world's busiest port, dropped by an estimated 40% in early April. ⁴

Behind the Headlines
Although the 8.5% year-over-year 'headline' inflation in March 2022 was a striking number for clients to consider at the time, monthly numbers provided a clearer picture of the trend. The month-over-month increase of 1.2% was extremely high, but more than half of it was due to gasoline prices, which rose 18.3% in March alone. ⁵  Despite the Russia-Ukraine conflict and increased seasonal demand, U.S. gas prices dropped in April, but the trend was moving upward by the end of the month. ⁶  The federal government's decision to release one million barrels of oil per day from the Strategic Petroleum Reserve for the next six months and allow summer sales of higher-ethanol gasoline may help moderate prices. ⁷

 

Core inflation, which strips out volatile food and energy prices, rose 6.5% year-over-year in March, the highest rate since 1982. However, it's important that our Devon Energy clients consider that the month-over-month increase from February to March was just 0.3%, the slowest pace in six months. Another positive sign was the price of used cars and trucks, which rose more than 35% over the last 12 months (a prime driver of general inflation) but dropped 3.8% in March. ⁸

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Wages and Consumer Demand
In March, average hourly earnings increased by 5.6% — but not enough to keep up with inflation and blunt the effects that impacted a variety of businesses, as well as many Devon Energy employees and retirees around the country. Lower-paid service workers received higher increases, with wages jumping by almost 15% for non-management employees in the leisure and hospitality industry. Although inflation cut deeply into wage gains over the prior year, wages have increased at about the same rate as inflation over the two-year period of the pandemic. ⁹

One of the central questions at the time was whether rising wages would enable consumers to continue to pay higher prices, which can lead to an inflationary spiral of ever-increasing wages and prices. Signals were mixed: consumer spending rose 1.1% in March 2022, but an early April 2022 poll found that two out of three Americans had already cut back on spending due to inflation. ^10-11

Soft or Hard Landing?
The inflationary situation raised many questions about the path forward. The Federal Open Market Committee (FOMC) of the Federal Reserve laid out a plan to fight inflation by raising interest rates and tightening the money supply. After dropping the benchmark federal funds rate to near zero to stimulate the economy at the onset of the pandemic, the FOMC raised the rate by 0.25% at its March 2022 meeting and projected the equivalent of six more quarter-percent increases by the end of 2022 and three or four more in 2023. ¹²  That path was projected to bring the rate to around 2.75%, just above what the FOMC considered a 'neutral rate' that would neither stimulate nor restrain the economy. ¹³

Those rate increases successfully brought the Fed's preferred measure of inflation, the Personal Consumption Expenditures (PCE) Price Index, down toward the Fed's 2% target -- a gradual disinflation that played out through 2023 and 2024. ¹⁴  PCE inflation -- which had reached 6.6% in March 2022 -- tends to run below CPI; as the Fed's tightening took hold, both measures declined meaningfully through 2023 and 2024. ¹⁵

The FOMC went on to raise the fund's rate by 0.5% at its May 2022 meeting -- the first half-percent increase since May 2000 -- and continued hiking aggressively through 2022 and into 2023. The FOMC also reduced the Fed's bond holdings to tighten the money supply. ¹⁶