Iran War: How will the Strait of Hormuz impact gas prices?
Iran War: Will gas in California go up to $6 a gallon?
The amount of ships passing through the Strait of Hormuz has slowed to a crawl since the U.S. and Israel started their airstrikes on Iran. The global impact of the straits closure is still being assessed but were getting a glimpse at how the price of oil and gasoline will be impacted.
SAN RAFAEL, Calif. - A mega oil tanker shipping lane 100 miles long and only 21 miles wide, called the Strait of Hormuz, could do serious damage to the U.S. and world economies if it remains closed to tankers much longer.
A crucial passageway
The Strait of Hormuz, a very narrow passage between Iran and the United Arab Emirates, is the world's most critical oil choke point.
"If these shipments out of the Middle East are interrupted for a long period of time, we could see hundred dollar oil, like hundred dollars a barrel oil, not before too long." said Professor Seth Blumsack of the Penn State Center For Energy and Law.
As of Wednesday, the price of crude oil is about $76 a barrel, already $15 a barrel higher than it was in mid-February.
Global oil supply
Even though very little of the U.S. supply of crude oil comes from ships transitioning through the Straits of Hormuz, its closure actually cuts off 20% of the entire world's supply of oil. And, since oil trades on international markets, the price of crude oil here and around the world is going up along with gasoline and other fuels.
"Energy prices are up across the globe, oil prices are up, gas prices are going up. Every $10 increase in a barrel is roughly 24 cents per gallon that you'll be paying more," said Governor Gavin Newsom.
The price of gasoline
By that calculation, gasoline prices, already up 35 cents a gallon since last month, could go up at least 60 more cents a gallon. If oil goes to $130 a barrel as some forecasters suggest, add another 60 cents a gallon.
If that happens, Bay Area regular gas would go from its current average of $4.83 per gallon to $6.03 a gallon.
What they're saying:
"That would be a travesty honestly. It's already so expensive as it is with all the excise taxes and things but there's not a lot we can do about it," said ferry commuter Bob Glasco. "I think it's likely. I think this is, it will cause a lot of economic hardship for a lot of people," said ferry commuter Jim Crawford.
Commuter Barbara Lawless lays the problem at the president's feet. "Trump has caused, he's caused this all and, if we don't turn around the Congress and get some more economic stability, which will happen and stop these shenanigans." said Lawless.
The president's response? "As soon as this ends, those prices are gonna drop," said President Donald Trump.
It should be noted that higher fuel prices contribute to inflation.
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