- It will take some time for fuel prices to fall once the Iran war ends.
- The strait’s closure has impacted food, medical, and other industries’ costs.
- Prices may fall more slowly in some parts of the country.
“Up like a rocket, down like a feather.”
News of a tentative agreement to end the war in Iran might make it tempting to believe that gas prices will tumble once oil starts flowing again, but that likely won’t be the case. ABC News recently spoke with industry experts who said it will take a while for the market to settle after fighting ends and ships again start moving through the Strait of Hormuz.
The war has thrown a wrench into the gears of global supply chains, affecting the transport of goods beyond oil. Medical supplies, fertilizer, food, and other products have been affected, and it will take time for shipping routes to return to a somewhat normal routine.
Analysts told ABC News they expect gas prices to fall slowly and noted that the correction will look different depending on where you live. Michael Lynch, a distinguished fellow at the Energy Policy Research Foundation, said, “The tendency of gasoline prices to fall slowly is partly because the raw material takes weeks to work through the system until it’s delivered to consumers.”
Some parts of the U.S., including the West Coast, might not have the refining capacity to meet fuel demand. Prices in those areas will likely take longer to drop, and they could remain higher than the national average for quite some time. Those timelines also impact food costs, a significant portion of which comes from fuel expenses during the shipping process.
Mark Barteau, a chemical engineering professor at Texas A&M University, noted that an agreement to open the Strait of Hormuz “is just the beginning.” The oil market is global and depends on several countries and independent parties.
As of this writing, AAA pegs the national average price for a gallon of regular fuel at $4.04. That’s a significant reduction from the $4.52 average seen a month ago, but notably higher than the $3.14 seen a year ago on this date.
