The months-long disruption of the Strait of Hormuz sent gas prices shooting up, creating pain at the pump for American motorists. It also sent political shocks across the country. Prices have come down over the past week with the recently signed agreement to end the war in Iran, reopen the Strait, and begin a 60-day negotiation period. But uncertainty over what happens in the weeks ahead, as well as the complexity of unscrambling the blockage created by the closure of the strait, will continue to affect gasoline prices.
To be sure, gas prices are continually variable—influenced by geopolitics abroad and simultaneously by the shifting balance of supply and demand in crude oil prices worldwide. Because of this, while the cost of oil can mirror inflation, it does not accurately reflect the state of the U.S. economy. Plus, America is both producing more oil than ever and driving more efficient cars. So why do gas prices continue to be the go-to metric to measure American economic anxiety? And what do current prices tell us about America’s role in the world?
This advance was celebrated in the 1920s by advertising man Bruce Barton, who had already achieved fame as the author of a number-one bestseller that described Jesus as “the founder of modern business.” Barton exhorted gas station owners that they were more than merely purveyors of “bad smelling liquid at so many cents a gallon.” Rather, he said that, in enabling mobility, they were selling “the fountain of youth” that has “worked miracles” in people’s lives
But that hearing established a pattern that has held true across the decades. It became axiomatic that whenever prices went up, public anger would rise as well. When headlines are filled with the fluctuations of gas prices, various branches of the federal government undertake rancorous investigations. The targets are typically the same: oil companies, charged with collusion and manipulation. Eventually, however, it turns out that the fundamental forces of supply and demand are what drive crude oil and, thus, gasoline prices.
I was called to testify at one such hearing in July 2008. With prices hitting $4.10 a gallon, concern was so high that two committees had merged to hold a combined session in a cavernous hearing room. Witnesses described the difficulties and pain these prices were causing motorists, as well as the pressure on family budgets. Senators were thunderous in their criticism. The hearing room resounded with charges of manipulation and urgent calls for action.
Prices at the pump
That being the case, why did gasoline prices soar 50% over the last few months? The answer can be found in the Middle East.
To be sure, Tehran pays close attention to American politics and, in particular, what happens at the gas station. “Enjoy the current pump figure,” was the message Iranian Speaker of the Parliament, Mohammed-Baqer Qalibaf, sent to Americans in April. “Soon you’ll be nostalgic for $4 to $5 gas.”
The United States, with its abundant resources, faced no physical shortage. But the oil market is global, and high oil prices feed back into U.S. markets as customers around the world compete for barrels to offset the loss from the Gulf. In this way, gas prices reveal that domestic policies can’t insulate America from the rest of the world—no matter how hard it might try.
Gas going forward
S&P Global measures over a hundred tankers that have been sitting in the Gulf laden with oil, 120 other tankers carrying various petroleum products like jet fuel, and more than a thousand other stranded ships. All of them will exit as fast as they can. But they all can’t leave at once. And they have to be very careful because of all the mines that Iran laid in the waters around the Strait.
Even assuming the agreement with Iran holds—and the Strait remains open and the negotiations proceed as hoped—U.S. gas prices, though down from the highest, can be expected to be above what they were last year.
Indeed, last year, according to S&P Global data, one in four cars sold worldwide was an electric vehicle (EV), most of them Chinese-made. But it’s a very different story in the United States, where the EV share of new car sales has dropped from a high point of about 12% before the Trump administration canceled tax credits for EVs to around 7% today. Overall, 97% of the entire U.S. car fleet runs on oil.
What ultimately happens in the Persian Gulf—whether the Strait of Hormuz is restored to its status as an international waterway as a result of the deal announced this week, with freedom of navigation, or, if the deal somehow fails to lead to a long-term agreement, it till remains under the sway of Iran—will determine gasoline prices over the summer. Whichever, American motorists and those around the world will be paying the price.
Hence then, the article about fuelling anxiety what gas prices tell us about america and the world was published today ( ) and is available on Time ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Fuelling Anxiety: What Gas Prices Tell Us About America and the World )
Also on site :
- Brownfields sind der wahre Test für die Automatisierung: So skalierte ForwardX 484 AMRs in einem laufenden Automobilwerk eines Erstausrüsters ohne Produktionsausfälle
- 1974 Yacht Rock Classic, Inspired by a College Crush, Became a Timeless Anthem of Lost Love
- Founding Member of ’80s Rock Band Announces Update on Supergroup