Economic risks are mounting as the Iran war continues. Rising gas prices could be just the beginning |
Economic risks are mounting as the Iran war continues. Rising gas prices could be just the beginning
Already paying 50 cents more per gallon at the pump, Americans could see even more economic fallout from the Iran war in the weeks and months to come
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The U.S. war on Iran is already showing up at gas pumps across the country. The national average for a gallon of gas hit $3.48 on Monday, up nearly 50 cents since the U.S.-Israeli strikes on Iran began 10 days ago, according to AAA.
But this sharp spike in prices is likely only to be preliminary. Here's why.
Why prices are up, and why they aren't done going up
The first wave of increases is here, and simple enough to understand: When gas stations know their next delivery will cost more, they usually raise prices preemptively, before the more expensive fuel even arrives. The result is that pump prices tend to respond to crude spikes faster than the strict underlying supply-chain economics. Thus the 50-cent jump Americans have already seen is the likely just the first wave of the pass-through.
Then comes the real one. While the relationship between crude oil prices and what consumer pay at the pump is not instant, it’s not exactly slow, either. When crude spikes, the increase moves through the supply........