US Families Feel Pinch as Oil Prices Surge Amid Middle East Conflict

Oil prices have surged following airstrikes by the United States and Israel on Iran, currently hovering around $100 per barrel for Brent crude and $97 for WTI. Prior to the conflict, these figures stood at $73 and $67 per barrel, respectively.

This price hike has quickly translated into higher gasoline costs across the United States. According to the American Automobile Association (AAA), the national average price for a gallon of gas now stands at $3.63, up from $2.30, which President Donald Trump proudly mentioned in his State of the Union address just a month ago.

With gasoline prices surging by 50% over the past month and 20% since the Middle East conflict began, the average American household could face an additional monthly expense of over $100 for fuel, according to calculations by Mark Wolfe, CEO of the National Energy Assistance Directors' Association.

Specifically, Wolfe notes that households were spending an average of $163 per month on gasoline when oil traded at $78 per barrel. As prices climbed to $90 and then $100 per barrel, monthly expenditures rose to $180 and $198, respectively. This increase places significant strain on lower-income families.

"Low- and middle-income families have very little discretionary income. An extra $50 per month for gasoline is unacceptable and forces them to cut back on other expenses," Wolfe observes.

Experts predict that families will drive less, reduce summer vacation plans, and curtail various other expenditures. "They will delay home repairs, do whatever they can because they need to buy gas. It's absolutely essential," Wolfe adds.

According to AP, gasoline prices may continue to rise in the coming days due to attacks on ships in the Strait of Hormuz on March 12 and the U.S. transition to summer-grade gasoline, which burns cleaner but is more expensive to produce.

William Stern, CEO of small business credit company Cardiff, notes that geopolitical shocks impact wallets within days. "You feel the pressure immediately when filling up your car to take your kids somewhere," he says.

Beyond fuel costs, there are broader economic implications. Professor Christopher Knittel of the Massachusetts Institute of Technology warns that rising gas prices could dampen economic activity and hinder growth.

Knittel illustrates that a typical American driver consumes about 600 gallons of fuel annually. Therefore, a $1 increase in price would mean an extra $600 spent on gasoline. "That means less than $600 available for other expenses, leading to a slowdown in economic activity," he explains.

He suggests that if the conflict ends tomorrow, the situation might stabilize. However, if it continues for 1-2 months or longer, there is over a 50% chance of a recession, with increased unemployment and potential stock market declines.

Inflationary pressures are also mounting. David Doherty, head of resource research at BloombergNEF, points out that diesel, a key fuel for freight transportation, is derived from crude oil. "It directly impacts inflation and can happen quite quickly," he notes.

Wolfe highlights that products ranging from polyester to fertilizers rely on oil and are affected by rising energy costs. "All things you wouldn't think are related actually impact ordinary families," he states.

Goldman Sachs analysts forecast that higher oil prices will lead to increased inflation, slower growth, and higher unemployment rates by year-end.

However, President Trump views high oil prices as a "small price to pay" to achieve national objectives in Iran. "Oil prices will fall quickly once the Iranian nuclear threat is eliminated, a very small price to pay for the safety and peace of America and the world," he wrote on social media last weekend.

Mark Wolfe disagrees, arguing that this is a small price for high-income families, as fuel costs represent a minor portion of their total expenses. For low-income families, however, it is a significant burden. "It makes a real difference in their ability to buy food, medicine, and pay rent," he says.

Oxford Economics notes that recent fluctuations in Brent crude prices are noteworthy. Typically, about 20 million barrels of oil pass through the Strait of Hormuz daily, but most ships are now avoiding the area.

"There is a strong likelihood that volatility will persist due to the lack of a clear timeline for de-escalation of the conflict and the reopening of the Strait of Hormuz, which is currently closed," the Oxford Economics analysis team concludes.

Meanwhile, Trump is trying to frame the rise in oil prices positively. "The U.S. is the world's largest oil producer, far surpassing other countries. Therefore, when oil prices rise, we earn a lot of money," he wrote on social media on the evening of March 12.

Phiên An (according to AP, Reuters, The Hill)