Oak Hill, WV (WOAY) – The conflict in Iran didn’t take long to reach into the wallets of West Virginians, with gas prices rising roughly fifty cents per gallon since operations in the region began.
Michael Negron, Senior Fellow with the Center for American Progress and former Special Assistant to the Biden Administration on National Economic Policy, explains why:
“The price of oil, just like the price of natural gas, is set globally because of what supply and demand is looking like, globally.” Negron explained. “So the fact that we can supply ourselves just because we have enough oil that is produced here is not going to insulate us from those price increases.”
He says the key driver in rising fuel prices is the Straight of Hormuz, a narrow waterway between Iran and the United Arab Emirates. About 20% of the world’s oil is transported through it, and Iran has effectively shut it down.
“That is a major problem for the global economy until it can get reopened, and at the moment it could be weeks or more before that happens” said Negron. “So we may be in for more pain when it comes to cost of living and in cost of business.”
The national average is near $3.50 a gallon. Negron warns it could reach 4 or 5 dollars if the conflict continues and that the effects will extend to fertilizer, aluminum, and shipping costs, affecting grocery prices, utility bills, and construction. For a rural state like West Virginia, Negron says it hits even harder.
“Gas prices hits lower income people harder hits folks who live in less dense areas live in rural, suburban, exurban areas harder than it does folks who live in cities. Because you just spend more time behind the wheel. Communities across West Virginia will be hit because of dependance on vehicles. And so hopefully this conflict doesn’t last too much longer. But you know, I’m concerned that it will last for for more than a few weeks and it will really hit people hard. And it really hit people who can afford it at least harder than others in this country.”
Negron says prices should fall once the conflict ends, but warns it may take some time depending on how much damage is caused to oil-producing infrastructure in the Middle East.
“What are these ports and facilities looking like? If facilities need to shut down, if this lasts long enough and petroleum and other products are just sitting in those ports in the Persian Gulf for weeks and weeks and weeks, such that you’re seeing generation plants, you know, drilling operations shut down, then it will take longer to get them back going.”
