As U.S.–Iran tensions escalate, gas prices poised to rise again. Here’s why

As the U.S. Navy positions ships for a blockade of Iranian ports along the Strait of Hormuz, Americans are bracing for another round of oil price increases.

On Monday, crude oil prices inched up again toward $100 a barrel.

At pumps in downtown Chicago, a gallon of regular gas could be found at $4.89 a gallon. Premium was listed at one South Loop station at almost $6.00 a gallon. Filling her SUV, resident Laverne Wright complained.

“I cannot believe that we have to pay this much,” she said. “It is almost a decision between groceries or how much gas you are going put in your vehicle.”

Chicago-based Gas Buddy analyst Matt McClain said he expects prices to increase because of the Iranian blockade, but he said how it’s implemented is important.

“If it’s just the Iranian ports that are being blockaded, that could actually translate into something slightly better with regard to the Strait of Hormuz being safely opened,” he said.

McClain said America is not having a supply issue.

There are significant oil reserves in the U.S., and the nation is a major exporter of oil. However, other places like Asia and Australia are far more dependent on Middle Eastern oil and may face shortages because of the closing. Roughly 15 to 20% of the world’s petroleum is shipped through the strait.

The situation is being watched closely half a world away in Texas, where some oil companies are cheering the president’s actions.

“They have been bullying the Middle East for almost 50 years now, and it’s because of the Iranian uncertainty that the price of oil almost always goes up,” said Rey “RT” Trevino III, vice president of operations for Pecos Country Energy.

Trevino said he believes that once the conflict with Iran is settled, three million barrels of oil a day could be added to world supplies.

“I see this as being great for America and even greater for the global community,” Trevino said.

So if America has plenty of oil, why are gas prices so high?

Experts point to the fact that oil is a commodity traded on a global exchange, which is governed by the laws of supply and demand. There is no American price for oil.

Even if U.S. producers pump a lot of oil, when there is a war or OPEC cuts production and pushes up prices, those producers will sell their oil at those higher world prices.

Back at the South Loop gas station, Mika Tang rolled in on her bright orange mountain bike.

“I am on two wheels right now. I filled up my gas tank the other day, and it was $80,” she said. “It’s usually $35.” 

For Tang, the warm weather made the choice easy.

“I just don’t want to keep filling up my tank at these prices,” she said.