Iran war cost US households $1,000, economist estimates

Key facts

• Economist Mark Zandi estimates the Iran war has cost U.S. households $1,000 in higher consumer costs.
• Higher consumer costs are primarily driven by increased prices for gasoline, diesel, and jet fuel.
• Disruptions in global oil flows are occurring through the Strait of Hormuz.
• Some airlines are gradually restoring flights to parts of the Middle East.
• Many airlines continue to suspend services to the Middle East.
• Ongoing disruption impacts global travel and causes financial strain for companies.
• Companies in Australia and New Zealand are affected by higher fuel prices and supply chain disruptions.
• President Donald Trump is frustrated by the slow drop in gasoline prices compared to crude oil.
• Suggestions have been made to investigate potential price gouging by oil companies.
• The lag between crude oil costs and retail gasoline prices is due to refinery processes, distribution, and seasonal demand.

Disruptions in global oil flows through the Strait of Hormuz, stemming from the Iran conflict, are leading to increased consumer costs and affecting the airline industry. Economist Mark Zandi estimates that the Iran war has cost U.S. households approximately $1,000 in higher prices for essential fuels like gasoline, diesel, and jet fuel. This situation is contributing to broader financial strain for companies, particularly in Australia and New Zealand, due to persistent supply chain disruptions and elevated fuel prices.

In response to ongoing diplomatic efforts to de-escalate the conflict, several airlines are beginning to restore some flight services to parts of the Middle East. However, a significant number of carriers are still suspending operations, which continues to impact global travel patterns. President Donald Trump has voiced frustration regarding the pace at which gasoline prices are declining, noting that they are not falling as rapidly as crude oil prices. This observation has led to suggestions for an investigation into potential price gouging by oil companies.

Experts explain that the delay between a decrease in crude oil costs and a corresponding drop in retail gasoline prices is attributable to several factors. These include the time required for refinery processes, the logistics of distribution networks, and seasonal variations in consumer demand. These elements collectively contribute to a lag effect that prevents immediate price adjustments at the pump.