The Iran war is in its 32nd day with consumers having paid an extra $8 billion in high gas prices alone, but gas is only the beginning.
The Iran war is in its 32nd day with consumers having paid an extra $8 billion in high gas prices alone, but gas is only the beginning.At a UPS store, fuel surcharges have been imposed for their massive fleet of trucks and planes.
This nasty bout of inflation is a painful lesson in the economics of war coming our way in a hurry and how the consumer is the one who pays for it. Jet Blue says it's raising baggage prices by as much as $9 a bag to offset the 83% increase in fuel since last month. "That's a major hit to the bottom line for airlines," said Severin Borenstein, a renowned energy and airline economist at UC Berkeley's Energy Institute at the Haas School of Business.There will be a lot more hits from the airlines. "What they do very quickly is they start canceling flights and downsizing the aircraft they use; they don't fly so many seats and when they do that, they start raising rates." said Professor Borenstein.Customers are being very unpleasantly surprised. "As I was checking the prices, a banner came up on my phone saying that prices were going to surge because of this, you know, war," said Arco customer Brian Walloons. "I've got places to go, weddings to attend and family to see. It's making the choice a lot harder of whom to choose to see because it's not affordable to get there," said Arco customer Solveig Peete.Now if it were just the pain here, we'd figure out a way to deal with it. But when the price of energy goes up across the board, then it impacts everything. Here's some of the other stuff that's going on. "Many products are made from crude oil. Over time, what you start to see is those price increases for crude oil and refined products start showing up in many, many things that we consume," said Borenstein.It all gets to us on ships, trains and trucks, who must raise their prices. "So those will eventually start feeding through in the price of every good that gets delivered," said Borenstein.Products we get in Asia and Europe will rise dramatically since the liquefied natural gas they use to make electricity cannot get through the Strait of Hormuz. "We're going to start to see substantial inflation because many goods are going to have higher costs due to the higher price of energy. And, that means we as consumers are going to pay more," said Borenstein.That's not what consumers want to hear. "I'm pessimistic. I think it's just going to get worse. I think it's just going to affect everything. Plus the tariffs. I think we're just really going to be hurting in the old wallet," said Arco customer Michael Carroll.Many experts now think oil prices will stay above $100 a barrel. "You can't rule out prices staying above a hundred dollars a barrel. In fact, I wouldn't rule out prices going much higher, particularly if the war drags on and the blockade of the Strait of Hormuz continues," said Borenstein.Tapping the Strategic Oil Reserve will take time, only coming out at a rate of one-eighth of what's been cut off and will only be temporary.
News Money Business Series Four Four Business Us Ca Marin County
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Pakistan says it will host U.S,-Iran talks as Iran warns against ground troopsPakistan announced Sunday that it will soon host talks between the U.S. and Iran.
Read more »
US Warns Iran: Deal or Destruction – Military Operations in Iran at a Critical JunctureThe United States is in intense negotiations with a new Iranian regime, threatening to obliterate critical infrastructure if a peace deal isn't reached and the Strait of Hormuz remains closed. The Pentagon prepares for ground operations as diplomatic efforts continue, while highlighting the destruction near the Al Araby TV offices after a missile strike in Tehran. The situation emphasizes the precariousness of the region, where diplomacy and military readiness are balanced.
Read more »
Iran live updates: Trump threatens Iran infrastructure strikes if talks failTrump said 'serious' talks are ongoing with Tehran.
Read more »
Iran live updates: Trump threatens Iran infrastructure strikes if talks failTrump said 'serious' talks are ongoing with Tehran.
Read more »
Iran live updates: Trump threatens Iran infrastructure strikes if talks failTrump said 'serious' talks are ongoing with Tehran.
Read more »
Iran live updates: Trump threatens Iran infrastructure strikes if talks failTrump said 'serious' talks are ongoing with Tehran.
Read more »