“the Strait of Hormuz hasn’t actually reopened yet — and there are serious doubts about what “reopening” means exactly (not to mention how long it might last).
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Assuming the Strait of Hormuz does fully reopen sometime soon — a big assumption given all the diplomatic challenges ahead — experts say prices at the pump still won’t plunge to their prewar level.
“There’s an old expression: Gas prices go up like a rocket and come down like a feather,” one independent oil analyst told CNN.
In the case of Iran, five factors will continue to pad the price of gas even after the end of the war.
First, oil production has largely ground to a halt across the Persian Gulf over the past six weeks — partly because the region’s oil infrastructure suffered damage and partly because countries such as the United Arab Emirates, Kuwait, Iraq, Oman and Saudi Arabia (the world’s largest oil exporter) ran out of storage space. An estimated 7.5 million barrels of production per day were shut down in March, according to the U.S. Energy Information Administration. Global supply will continue to suffer while these countries play catch up — a process that could take years, experts say.
Second, exporting oil from the Gulf will get more expensive if Iran charges a toll, and that added cost — an estimated $1 per barrel, according to CNN — is likely to be passed on to consumers.
Third, insurance for ships that cross the Strait of Hormuz will likely cost more as well — another expense that could make gas and other petroleum products pricier for Americans.
Fourth, “traders will want some premium to compensate for [the] risk” that the “ceasefire breaks,” according to Zandi. That’s why oil futures are still above prewar levels through the end of 2026.
Finally, retail gas station owners set their prices based on the wholesale price of gas. When oil gets more expensive, that price goes up — but gas stations tend to accept a smaller profit margin on each gallon they sell in order to stay competitive. Then, when the cost of oil starts to fall, they typically try to even things out by hanging onto higher gas prices for as long as possible.”
Compared to the alternatives, coal is worse for air pollution, worse for ocean pollution, worse for global warming, uses more water, is less efficient, and costs more. Coal was a competitive source of energy before we had modern gas plants.
Even when comparing an electric vehicle getting electricity from a gas power plant to a gas vehicle, electric vehicles are still more carbon friendly because a car’s engine is less efficient at generating power than a gas power plant, and because a lot of carbon is used to transport gasoline. And, as electric grids use more and more low-carbon sources, the electric cars have an even greater carbon advantage.
Fracking creates an ingredient for plastic, and fracking companies can’t release that into the air because it is bad for the environment, so plastic companies get the ingredient to plastic super cheap from fracking companies, making new plastic cheaper than recycled plastic.
Global warming is a contributor to increased electricity prices, then politicians use high electricity prices to argue that we need more fossil fuel based electricity, which drives global warming higher.
“Trump said the administration was officially terminating Biden’s “ridiculous” CAFE (corporate average fuel economy) rules, claiming car prices would come down in response to today’s action. Automakers are now required to meet an average of 34.5 mpg across their model fleet by 2031, a dramatic drop from the average of 50.4 mpg across 2031 that the Biden administration had proposed.”
As the U.S. backs away from clean energy and limiting global warming on the president’s false belief that climate change is a hoax, China is stepping in as a leader globally, leading on the issue and selling its technologies and products to countries around the world. Despite its leadership and its massive renewable production, it still uses a lot of dirty coal. China’s clean energy partnerships around the world give it influence. The Trump-led U.S. is banking on past fuels and energy, while China is advancing into the future.
“”Californians pay an additional 72.4 cents per gallon at the pump attributable to state and local taxes and fees, which is the highest in the nation,” according to the California Tax Foundation.”
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“”the state’s cap-and-trade program affects gasoline prices because it requires fuel suppliers to purchase permits that cover the greenhouse gases emitted when the fuel is burned. We estimate that this currently adds 23 cents per gallon to the price of gasoline.””
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“California has effectively walled its market off from fuel produced elsewhere. They write that, despite bordering other states from which fuel could theoretically flow to satisfy demand and lower prices, California policies have made the state an “island” because of “capacity constraints on California’s pipelines and the state’s stringent environmental fuel standards, which effectively require fuel to be refined in-state and limit the ability to import fuel from other regions.””