President Donald Trump said on Wednesday that if his war in Iran had dragged on much longer, the US could have faced “economic disaster” with gas prices expected to rise like an emergency. oil the reserves were exhausted.
But new reports suggest that even though the war seems to be it comes to an end and the Strait of Hormuz is reopening, tremendous irreversible damage has already been done and the economic consequences will be felt well into the future.
Institute in Taxes and Economic Policy (ITEP) RATINGS that as a result of the war, Americans paid nearly $54 billion more for gas and fuel, amounting to more than $400 per household, than if the war had never begun.
In the wake of the memorandum of understanding signed between the US and Iran, Trump has tried to seek credit as average gas prices fell below $4 for the first time since the early days of the war in March. However, gas it still costs 25% more than last year.
This situation can be expected to continue in the future. According to the Associated Press reported Thursday morning:
Although gas prices begin to fall, it is expected to fall weeks or months for oil to start flowing again through the Strait of Hormuz…
And Gulf oil producers that curbed production will need time to get oil moving again. Analysts also say that ship captains can take their time to decide whether the passage is safe and that the threat of attack from Iran has indeed diminished.
Additionally, refiners typically pay for crude oil a month or more in advance, so even after oil prices fall, they won’t immediately process cheaper products.
Fighting over the Strait of Hormuz disrupted not only crude and refined fuel supplies, but also supply chains for fertilizer, food and even shoes. Businesses expect the higher costs to remain, which means their customers may need to prepare for this as well.
Patrick De Haan, an oil analyst at GasBuddy, told CBS News it will be “a very long process, many months to many years, for things to fully normalize” and that it could take “potentially mid to late 2027” for gas prices to return to pre-war levels.
Although Americans, and indeed consumers around the world, continue to see their pocketbooks drained in the coming months, there is one big winner here: the fossil fuel industry.
A ANALYSIS released Thursday by the environmental group 350.org shows that over the course of the war, households and businesses paid the oil and gas industry $374 billion in extra profits because of war-induced higher prices.
Based on price scenarios from the International Monetary Fund, the group designed that even with the Strait of Hormuz open, the amount removed could reach over $700 billion by the end of the year.
“Even if the Strait of Hormuz reopens tomorrow, we should expect prices to remain above pre-crisis levels,” said Andreas Sieber, head of political strategy at 350.org. “We are witnessing not only a massive fossil fuel crisis, but also a massive and increasing transfer of wealth, built on the volatility of fossil fuel markets and pain.”
