Higher gas prices are the least of our problems
Oil shocks, supply chains and Asian chip dependence could amplify economic fallout
COMMENTARY
By Peter Morici - Tuesday, March 17, 2026
OPINION:
The thinking among economists is that a moderate jump in oil prices instigated by the war with Iran shouldn’t cause a recession for the U.S. economy. President Trump says a temporary spike in the cost of oil is a small price to pay to secure peace.
Don’t bank on the economists, but Mr. Trump is right.
In February, Brent crude cost $71 a barrel, and the national average price of a gallon of gasoline was $3.04. Each $10 increase in oil should push up gasoline prices by about 15 to 20 cents per gallon. That hurts working families, but gasoline and diesel represent only about 3% of the consumer price index, and that money doesn’t leave the economy.
The U.S. is a net oil exporter, and incomes in the domestic petroleum industry will rise.That should translate into more investment.
Still, Americans spend less on other stuff almost immediately, and new spending in the oil patch arrives with some lag.
Wells Fargo’s economists estimate that a 50% increase in oil prices would reduce consumer spending by 1 percentage point. By itself, that shouldn’t be enough to cause a downturn.
Wars always have unforeseen consequences.
By supporting the Houthis, Iran has been terrorizing shipping around the Suez Canal. By attacking other Gulf states, it has now effectively shut down passage through the Strait of Hormuz.
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READ MORE: https://www.washingtontimes.com/news/2026/mar/17/higher-gas-prices-least-problems/
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