- The average cost of a gallon of gas exceeded $4 on Monday for the first time in a month.
- Price increases come as the U.S. and Iran resumed attacks after the collapse of a June ceasefire.
- Rising gas prices could reverse the June inflation decrease, the largest in six years.
The price of gas across the country surpassed $4 per gallon Monday amid rising hostilities between the U.S. and Iran and shipping traffic through the critical Strait of Hormuz once again coming to a virtual standstill.
Consumer fuel prices across the country had been trending downward since the two countries signed a memorandum of understanding in mid-June that included, in part, an agreement to curtail attacks and re-open the Persian Gulf shipping passage. While that agreement has not held, mediators were working to bring U.S. and Iranian negotiators together on a new ceasefire agreement, per a report from the Wall Street Journal.
The national average price of a gallon of regular was $4.003 on Monday, according to tracking by AAA, up 13 cents per gallon from a week ago and 86 cents higher than this time last year. It’s the first time the U.S. average gas price has exceeded $4 per gallon since mid-June.
Following weeks of mostly paying prices well north of the national average, Utah drivers were seeing an average pump rate slightly lower than the rest of the country at $4.00 per gallon, up 3 cents from this time last week and 66 cents per gallon over 12 months ago, per AAA.
Earlier this month, Robin Brooks, senior fellow in economic studies with the Brookings Institution, told Marketplace that before the U.S. and Israel launched attacks against Iran in late February, U.S. drivers were paying an average of about $3 per gallon. That national average would later climb past $4.50 before inching down as tensions eased. Brooks said prices were heading back up amid renewed attacks by both the U.S. and Iran, elevating pressures on U.S. household budgets.
‘Obviously, this is going to push the prices at the pump back up,” Brooks said. “So it’s not good for the U.S. consumer and it’s going to feed resentment and fears over affordability.”
If the Iran conflict should return to a full-blown “hot war,” drivers should expect prices to head back toward recent highs.
“I think the shock is basically the same,” Brooks said. “If you think back to the worst moments that we’ve had (since the start of the Iran war), oil basically topped out around $125, $126 per barrel. I think that’s the top that we’ll see now, if we really go back to a bad conflict again.”
Global oil prices rose above $90 per barrel Monday before inching down following news that Iran’s foreign ministry had presented proposals to revive the U.S.-Iran truce that collapsed last month, according to a New York Times report.
Lower fuel prices helped bring headline U.S. inflation down to 3.5% in June, according to a Labor Department report released last week, down from May’s 4.2% annual rate and the biggest month-over-month decline in six years. A return to price escalations could push that figure higher in the coming weeks, however, amid renewed fighting.
Consumer economic worries are on the rise
Recent statewide polling conducted by the Deseret News in partnership with the University of Utah’s Hinckley Institute of Politics found an overwhelming majority of Utahns, 84%, registered some level of concern with the overall direction of the economy right now, with 41% saying they are very concerned and 43% somewhat concerned.
On the other side of the sentiment question, 12% said they are not very concerned and 2% said they’re not at all concerned.
Feelings about the direction of the economy were similar among men and women as well as different age groups and across the income spectrum. But stark differences appeared when polling responses were filtered by self-reported political affiliation.
While 94% of Democrats who participated in the poll reported some level of concern about the path of the economy, only 75% of Republicans said they were very or somewhat concerned.
Morning Consult conducted the poll of 850 registered Utah voters June 16–22. It has a margin of error of plus or minus 3 percentage points.
The new findings mirror state and national data gathered by the Deseret News/Hinckley Institute in May when 80% of Utahns and 79% of Americans reported some level of concern about the economic fallout from the Iran war.