Part of The Bird on Fire’s What’s in the News

By 8th-Grade Blogger Max Pretorius

Have you or your parents gone to the gas station recently? If you have, you’ll have definitely noticed gas prices going up. Many people know this has to do with conflict in Iran, but there is much more to it than that.

Iran Blocks the Strait of Hormuz

The Strait of Hormuz is a wide straight between Iran and a small exclave of Oman. It connects the Persian Gulf to the Indian Ocean. Recently, the United States has engaged in conflict with Iran. Iran then decided to blockade the Strait of Hormuz by attacking anything that goes through the strait. According to The New York Times, “The vital waterway, which normally carries one-fifth of the world’s oil exports, has been all but shut down by Iran’s attacks on commercial vessels”. 1/5th of the world’s oil is a lot of oil.

Why are we affected?

Many people have pointed out that it doesn’t make sense for this to impact the United States. According to American Fuel and Petrochemical Manufacturers, 60% of crude oil used in American refineries is from the United States, with 88% of it being from North America. By this logic it doesn’t make sense for the United States to be affected. As the U.S. Energy Information Administration states, “Crude oil is traded in a global market.” This means that if there’s less oil in the global market, oil prices increase everywhere. Intuitively, it makes sense. If United States oil prices didn’t increase, it would be better for American oil manufacturers to export oil to other countries willing to pay more. Well, this isn’t entirely true. Sometimes oil prices from a certain place can change based off oil type and transportation options.

The Impact

Due to the current conflict in the middle east, according to AAA (as of March 31), gas prices in California have risen to $5.561 from $4.593 a month ago. That’s nearly a $1 per gallon difference! It’s unlikely these prices will go down until Iran stops blockading the Strait of Hormuz.