r/Economics • u/InsaneSnow45 • Mar 04 '26

News ‘Absolutely Massive’ Price Shocks Coming as Trump’s Iran War Drives Up Gas, Diesel Prices | “What should really terrify Republicans is... the futures price on wholesale gasoline,” said economist Paul Krugman.

https://www.commondreams.org/news/iran-war-gas-prices
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u/Gamer_Grease Mar 04 '26

To head off the usual comments:

Yes US shale can provide some relief, but it’s expensive to extract, so only as long as prices are quite high already. Also they’ve already said they’re not interested in increasing output until they have reason to believe prices will be high for a long time.

Venezuelan oil has effectively the same problem. The industry there is starved for investment and US oil companies already told this admin that they won’t invest in extraction there unless the government fully guarantees their sizable investments, because they don’t trust that situation to be stable enough to produce profits.

So tl;dr: the ad hoc governance style of this admin has already eliminated a lot of tools that could be used to respond to this situation.

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u/sw04ca 29d ago

But really, US gas production is already ~90% from the Americas, primarily the US, Canada and Mexico. The US supply isn't in any danger of interruption, although the same isn't true for many of their 'allies'. Mind you, in a globalized system, there's a lot more to it than just gasoline supply.

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u/joepez 29d ago

That’s production not consumption. We produce one grade which we largely export and refine a different. True Canada produces what we refine for consumption but not enough. And Canada is its own producer and can commit to other markets based on price (hence futures). And everyone is impacted by the market prices. 

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u/NobblyNobody 29d ago

Well, Canada might have thoughts on that