Newsmax: Americans have paid more than $100 billion in additional gasoline and diesel costs since the war with Iran began in February, according to a Brown University estimate, as oil prices above $100 a barrel put renewed pressure on household budgets and the U.S. economy.
The Climate Solutions Lab at Brown University estimates consumers have collectively spent about $107 billion more on gasoline and diesel than they would have without the Iran conflict and disruptions stemming from the Russia-Ukraine war, The Wall Street Journal reported Wednesday.
The added costs have averaged more than $500 million a day since the United States and Israel began military operations against Iran on Feb. 28.
Brown’s Iran War Energy Cost Tracker compares actual retail fuel prices with an estimated “no-war” price based on prewar prices and historical daily price changes. Researchers then use federal fuel consumption data to estimate the nationwide cost.
Brown said the additional fuel burden crossed $100 billion around Labor Day. At that point, the university estimated the average U.S. household had paid more than $750 in additional gasoline and diesel costs since the conflict began.
The estimates do not account for consumers reducing fuel use because of higher prices, meaning actual additional spending could be somewhat lower.
Brown’s tracker relies on retail price data from AAA, along with consumption data from the U.S. Energy Information Administration and Census Bureau household data.
“But in a way that is another cost of the war, people being forced off consumption they would otherwise have chosen,” said Jeff Colgan, a Brown University professor and director of its Climate Solutions Lab.
Higher energy prices are also contributing to broader inflation pressures and complicating the outlook for consumers and the Federal Reserve.
“It’s definitely a drag on the economy,” said Michael Pearce, chief U.S. economist at Oxford Economics.
The impact is particularly significant for lower- and middle-income households, which generally devote a larger share of their income to necessities such as fuel.
Americans’ personal saving rate fell to 3% in July, one of its lowest levels since the 2007-2009 recession, according to the Bureau of Economic Analysis.
Pointing to Americans drawing down savings to cover expenses, Pearce said, “That obviously can’t be sustained forever.”
Oil markets are facing several simultaneous pressures. Shipments through the Strait of Hormuz remain below prewar levels, Iran-backed Houthi militants have threatened tankers on the western side of the Arabian Peninsula, and Ukrainian attacks have disrupted Russian refining capacity.
Diesel has emerged as a particularly significant part of the energy shock because of its widespread use in trucking, agriculture, construction, and other industries.
AAA said the national average for diesel reached $6.31 a gallon Wednesday, a record. The average was about $3.70 a gallon a year ago. Regular gasoline averaged about $4.37 nationally, up from about $3.19 a year earlier.
California diesel prices were above $8 a gallon Tuesday, according to AAA data.
Brent crude futures closed Tuesday at $108.75 a barrel, while diesel futures reached a record $5.26 a gallon.
Roukaya Ibrahim, chief commodity strategist at BCA Research, said prices may be reaching levels at which businesses begin reducing operations that are no longer profitable.
“It’s probably already leading to demand destruction,” Ibrahim said.
The consequences could eventually reach consumers through higher prices for goods transported by truck and through increased agricultural costs.
“We’re nearing the harvest season for certain important crops in the U.S.,” Ibrahim said. “That’s also a source of upside pressure [on fuel] that could filter through to food prices.”