A tentative deal to end the Iran war makes it reasonable to ask how soon prices will drop for gasoline, groceries, airline tickets and other items that got more expensive during the conflict.
Not so fast, experts say.
Even after oil starts flowing again from the Middle East, it could take a while for consumers to see a difference at local fuel pumps, supermarkets and other places they shop, according to economists and industry analysts.
Fighting over the Strait of Hormuz disrupted not only supplies of crude and refined fuel but also the supply chains for fertilizer, food and even footwear. Businesses expect higher costs to linger, which means their customers might need to prepare for that too.
“It is not clear, despite three months of war, that anything has been achieved that makes the American consumer better off,” Brett House, an economist who teaches at Columbia Business School, said. “In fact, by almost any measure, not just the American consumer, but the world, is worse off as a result of this attack.”
Yeah, because, amongst many other reasons, the strategic petroleum reserve is being drained (set to run out in July, I think) and not only will the supply shock of it running out be insane pretty much everywhere in the country, but also, supply chains are super complex, and petroleum products and byproducts are used all over the place, and there’s going to be an enormous and long-lasting series of crazy economic and production ripples in tons of areas people don’t expect - like, as an example, food prices.