21 hours ago - Economy
Don't expect pre-war gas or airfare prices any time soon
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Data: U.S. Energy Information Administration; Chart: Erin Davis/Axios Visuals
Even with the makings of a deal to end the Iran war, gas and airfare will take longer to return to pre-war levels — if they ever do.
Why it matters: Americans are feeling pain at the pump and on travel booking sites, frustrating President Trump as the midterms draw near.
The big picture: Oil prices can rise quickly and dramatically when headline-grabbing events like war or hurricanes threaten global supplies.
- It usually takes longer for them to settle down after seismic events.
- That's becauseit takes timeto spin up production, get the supply chain moving again and meet demand.
Case in point: In several major modern world events with big impacts on oil markets, Brent crude prices were still higher than pre-event levels even 100 days later, as charted above.
- Gas prices eventually follow changes in oil prices — but not immediately.
Axios' Matt Phillips writes: "Retail gasoline prices typically take a while to drop after shooting up, a phenomenon known as 'rockets and feathers.' (Gas prices go up like a rocket, but drop slowly and gently, like a feather.)
- "From the perspective of those selling gas, this makes perfect sense, as they capture fatter profit margins when wholesale prices fall but retail prices stay elevated."
Data: FRED, EIA; Chart: Erin Davis/Axios Visuals
Flashback: After Russia invaded Ukraine in 2022, Brent took 171 days to return to pre-invasion prices. Gas took another 104 days beyond that.
- Saturday marks 119 days since the Iran war started.
Friction point: The status of the Strait of Hormuz, so critical to global oil flows, is murky at best.
- More ships have been transiting it lately, but traffic levels are nowhere near pre-war levels.
- Iranian forces struck a ship passing through the Strait on Thursday, complicating efforts to restore normalcy.
Some shipping companies may avoid Hormuz until they're more sure about safety and stability.
- It's unclear how potential Iranian fees on ships using the Strait may affect oil prices. And there's the pesky issue of all those mines that still need to be cleared.
Reality check: U.S. gas prices have been dropping, but they're still way above prewar levels.
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As of Friday, the national average was $3.90 for a gallon of regular, per AAA. That's compared to $3.22 a year ago.
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