WARREN, Ohio – If you’ve filled up your vehicle’s gas tank over the past several days, you already know you’re paying more.
The American Automobile Association’s website reports the average national price of regular grade gas at $3.47 per gallon as of Monday. In late February, the average national price per gallon was $2.98, according to the motor club. The average price Monday was $3.44 per gallon in Ohio and $3.58 in Pennsylvania.
The increase is linked to the conflict in Iran, which started Feb. 28 when the United States and Israel began bombing targets in that country. While world affairs often impact crude oil, which affects gas prices, typically there’s a lag. This time, it happened quickly.
“It’s because the supply shock was so dramatic,” said AJ Sumell, an economics professor in Youngstown State University’s Lariccia School of Accounting and Finance. “It’s not typical that you just see something that just completely reduces supply in such a short period of time.”
But much of the world’s oil and gas supply travels through the Strait of Hormuz, which has been shut down since the bombing started.
“You’ve had experiences in the past where there’s just a reduction for, say, a natural disaster of some kind, an oil spill or even limited supply going through that strait,” Sumell said. “But it’s gone from normal to zero, effectively zero.”
The change has been dramatic regarding the ability to transport global oil impacting Europe even more than the U.S., he said. “But it’s a global market, so anything that impacts anywhere eventually also impacts us.”
Depending on how long the fighting continues, price increases could affect other consumer goods.
“And that’s because gas is not just something consumers use in cars, but something businesses use, as far as just energy,” the economics professor said.
It’s essentially a universal input in the production of goods and services that we all consume, Sumell explained.
“And whenever the price of an input goes up, that’s naturally going to increase costs associated with production,” he said. “That impact is not experienced immediately, but the longer that that input remains elevated in terms of price, then the more likely that those increased costs will be passed on to consumers.”
Several Mahoning Valley trucking companies couldn’t be reached to comment Monday. But Western Reserve Transit Authority, the public transportation agency that transports 7,000 daily riders, is insulated from the higher gas prices.
“We have a fixed contract for the whole year, so we won’t be affected until next year, if it continues,” CEO Dean Harris said.
The contract, which runs through December, is with Sunoco. WRTA’s price is locked in at $2.25 per gallon for diesel and $1.92 per gallon for gas.