US drivers cut back as Iran war pushes fuel costs higher

NEW YORK: Boston resident Pat Ouedraogo has cut longer-distance trips, while aspiring law student Skyler Burke drives extra miles to avoid pricier gasoline pumps closer to home. In ​Houston, auto broker David Wright has switched from a gas-guzzling race car to an all-electric vehicle.

These struggles are being echoed by motorists across the United States, many of whom ‌have grown increasingly wary of the Iran war as it drives fuel prices toward record highs. Energy market experts have described the six-week-old war as the worst oil-supply disruption ever as major production facilities have been hit and a key shipping passage has effectively closed.

“It’s a situation where you feel powerless about these prices,” Ouedraogo said, while pumping a few gallons of gasoline into his Nissan SUV at a Shell station that was charging $4.99 a gallon.

Average U.S. gasoline prices stood at $4.16 a gallon on Friday, ​while diesel averaged $5.67, the most that consumers have paid at the pumps ahead of the peak summer travel season since Russia’s February 2022 invasion of Ukraine roiled global energy markets, data from GasBuddy ​showed.

Those prices translate into an estimated $10.4 billion increase in U.S. gasoline and diesel spending this year compared with the same March 1-April 10 period last year, ⁠since the war began, GasBuddy’s Patrick De Haan said.

For Houston-based trucker Eddie Esquivel, the surge in diesel prices has translated into a near-doubling of his weekly expenditures to $1,600-$1,700 from $800-$900 before the war.

“These prices are ​hitting real hard. Diesel was $2-something a gallon. Now, it could hit $6,” Esquivel said at a QuikTrip filling station in South Houston, Texas.

“You got truck payments, you got to buy tires, you got to do oil changes, ​and you got a family,” Esquivel said. “This is killing us.”

POLITICAL FALLOUT FROM PUMP PRICES

To be sure, consumers are paying dearly for fuel across the world, as Iran’s blockade of the Strait of Hormuz has starved Asian and European markets of Middle Eastern oil supplies.

The United States is the world’s largest fuel consumer, so pump prices hold a unique significance in American politics. The searing economic pain felt by motorists due to the persistence of Russia’s war in Ukraine had been a major ​influence in their decision to elect Donald Trump as president in November 2024.

Now, just months ahead of midterm U.S. elections in November, Americans’ approval of Trump has crashed to new lows as they square his campaign promises ​of lower energy costs against the sharpest increase i n consumer prices in nearly four years in March due to the record surge in fuel prices.

“I definitely won’t be voting for (the Republican) party or anyone affiliated with this president right now ‌who is in ⁠office at all,” Kari DyLong said while filling up her pickup truck at a service station outside of Denver.

To make matters worse, the elevated gasoline prices are expected to linger even after Trump eventually decides to end U.S. military involvement in Iran, according to the U.S. government’s own admission.

Delegations from the United States and Iran are set to hold talks in Pakistan on Saturday aimed at reaching a permanent ceasefire deal after a fragile two-week truce announced earlier this week.

However, even if such a deal is struck, oil and fuel prices are unlikely to return to their pre-war levels in quick order, analysts said earlier this week. U.S. consumers will continue ​to pay the highest prices in years to fill ​up their vehicles or fly over the summer, ⁠they said.

“We still expect a lingering geopolitical risk premium to remain in the market,” said Wei Ren Gan, analyst at consultancy Rystad.

“Rather than a rapid recovery to pre-war levels, prices are likely to soften gradually and could remain relatively higher than pre-war benchmarks.”
About 2 million barrels per day of Middle Eastern refining capacity ​has been knocked out of service due to damage in the ongoing war, according to Macquarie analysts.

DEMAND DESTRUCTION

Signs of demand destruction due to the high ​gas prices have begun to ⁠show in U.S. government data. Gasoline demand in the country in the week before Easter stood at just 8.6 million barrels a day, down 9% from last year’s Easter demand.

Other indicators show the extent of hardships consumers are facing: pawn loan transactions have surged 9% as gas prices surpassed $4 a gallon, said Tim Jugmans, financial chief at pawn loan provider EZCORP.

For Denver resident DyLong, the cratering of demand has come in the form of cutting back ⁠on personal ​excursions over the weekends. She faces a 40-minute commute to get to her job as a sales manager for craft brewer ​Oskar Blues.

“I’m doing things way more at home and not venturing out because I’m having to spend a bigger portion of my paycheck now towards gas to get me to work,” she said.