Bold statement: A widening Iran conflict could push up oil prices and make the very affordability problem Americans are feeling worse. And this is the part many overlook: those higher costs don’t stay in the oil market—they ripple through gas pump prices and everyday expenses.
Why this matters: This is shaping up as a central tension of President Trump’s second term—foreign actions that risk undoing core domestic promises to lower consumer costs just as midterm elections approach.
- The trade-off is clear: Trump has pushed for aggressive import taxes to balance global competition, but the result has been higher prices for everyday goods.
Big picture: Gas prices have secretly helped keep inflation lower, acting as a deflationary tailwind. In January, they were roughly 7% cheaper than a year earlier, which has helped ease overall inflation.
- Yet turmoil in the Middle East could reverse that benefit. No one knows how long a price spike would last or how steep it would be.
- Economists estimate that a $10 rise in crude could translate to about 24 cents more per gallon at the pump, according to RSM’s chief economist, Joe Brusuelas.
Zoom in: Gas prices dominate how people feel about the cost of living; they’re a visible signal of inflation. A price uptick would squeeze household budgets and reinforce negative perceptions about the economy.
- Historically, when gas prices rise, consumers have expected higher inflation as well. A related study notes that even when gas prices fell, inflation expectations sometimes stayed elevated due to tariff effects.
What insiders are saying: Mark Malek, CIO at Muriel Siebert, suggested the conversation about inflation’s stickiness could take a turn if energy shocks persist. He warned that a sharp energy spike could accelerate headline inflation, raise transportation costs, and push goods prices higher, flattening any previous improvement in inflation trends.
What to watch: Gas has been one of the few deflationary signals in the economy, but new dynamics are unfolding.
- AI-driven demand for electricity is pushing utility bills higher in some regions.
- Prices for groceries and other goods have risen, and the White House has signaled it will work with trade authorities to revisit tariffs that the Supreme Court has blocked.
Bottom line: Voters are already worried about the economy and their wallets. If oil prices stay higher, it could pose a political risk for Republican candidates in November, according to Brian Gardner, a lead policy strategist at Stifel.
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