The US-led war on Iran has sent American fuel prices soaring, creating a major political threat for President Trump just months before the midterm elections.
Global oil markets have been in turmoil since the first strikes against Iran. Brent crude has jumped from $70 to more than $100 a barrel, while average US petrol prices rose by 11% last week to reach $3.46 a gallon.
In Massachusetts, Christopher Knittel, an energy economics professor at MIT, said he had to change his travel plans after seeing prices hit $3.99 a gallon. “I didn’t fill the tank completely; I’m waiting to find cheaper fuel in New Hampshire,” Knittel said.
Analysts say the spike is driven by Iran’s control over the Strait of Hormuz, a choke point for 20% of the world’s oil and gas. Patrick De Haan, an analyst at GasBuddy, said approximately 20 million barrels of oil a day are failing to reach their destination. He noted that if the conflict lasts until the end of March, the price surge could be among the ten largest in history.
The timing is a blow for the White House as government data shows rising unemployment and growing public pessimism about the economy. Republican strategist Mark Bednar said the government believes it is “politically essential” to keep prices low, especially as Trump previously campaigned on a promise of cheap energy.
During his State of the Union address, Trump pointed out that petrol in Iowa cost $1.85 a gallon. By the time of the strikes against Iran, that price had already climbed to $3.18.
Experts doubt the crisis will end quickly. Michelle Brouhard from the analysis firm Kpler said a swift resolution is unlikely, noting that the appointment of Mojtaba Khamenei as Iran’s new Supreme Leader suggests the regime will not back down. Analysts estimate there is only a 33% chance of the Iranian government collapsing by June.
Knittel warned of a “rockets and feathers” effect, where petrol prices shoot up instantly during a conflict but take much longer to drop once oil prices fall. He said if oil reaches $150 a barrel, petrol could hit $5 a gallon, which would heavily influence how Americans vote.
When Knittel reached his family cabin in New Hampshire, he found local competition had pushed prices down to $2.84. However, he noted that the same fuel had cost only $2.24 the previous week.