00:00For millions of Americans, the Iran war is no longer just a foreign policy story.
00:04It is showing up every time they fill their cars with fuel.
00:08Gasoline is what they call it.
00:10The US national average has crossed $4 a gallon, reaching about $4.14 on Labor Day,
00:17the highest Labor Day price on record.
00:20And that is a politically dangerous number for Donald Trump.
00:23Because Americans may tolerate a distant geopolitical crisis,
00:27but they feel inflation every time they drive to work, take their children to school, or fill up the family
00:34car.
00:34So the big question is, will US fuel prices keep rising?
00:39And if they do, could expensive fuel become a major issue in the November midterm elections?
00:44Let's understand what is happening.
00:47Back in late February, the average US gasoline price was around $2.98 a gallon.
00:53Today, it is roughly $4.14.
00:55This is an increase of more than $1 a gallon.
00:59The biggest reason is crude oil.
01:01And the biggest problem in the oil market right now is the trade of Hormuz.
01:05This narrow waterway is one of the world's most important energy choke points.
01:10A large share of the world's oil and petroleum products normally passes through it.
01:15But the continuing U.S.-Iran conflict has severely disrupted tanker traffic.
01:19And markets are pricing in the possibility that those disruptions could continue.
01:25Brent crude has now moved close to $100 a barrel.
01:30And analysts warn that a prolonged disruption could push it towards $120.
01:35That immediately matters to American consumers because gasoline prices are not determined only
01:41by what happens at the petrol pump.
01:44They begin with crude oil.
01:46Then comes refining costs, distribution, and marketing and taxes.
01:51And crude oil is normally the largest component.
01:53The U.S. Energy Information Administration says changes in crude prices and refining costs account
02:00for most of the variation in the gasoline prices.
02:03There is another problem this time.
02:05Refinery margins.
02:07The so-called crack spreads have also been elevated.
02:10Some U.S. refineries have faced operational problems while very high refinery utilization
02:15means there is less room for disruption.
02:17And the effects are not limited to gasoline.
02:21Diesel has also hit record levels.
02:23That is particularly important because diesel powers trucks, agriculture, and much of America's
02:28freight network.
02:29So expensive fuel eventually feeds into the price of food, transportation, and other goods.
02:36So the question is, will the gas prices keep rising?
02:39This is where the answer becomes complicated.
02:41They could.
02:42But it is not inevitable.
02:44If fighting in the Middle East continues and the Strait of Hormuz remains seriously disrupted,
02:49just like now, oil prices could remain elevated through the autumn.
02:53And that means Americans could face another expensive September, October, and November.
03:00And that is precisely the nightmare scenario for the Trump administration.
03:04Because there is a time lag between crude oil moving higher and the full impact reaching
03:09consumers.
03:10And there is another seasonal factor.
03:12The summer driving season is ending.
03:15Normally, that can help gasoline prices because demand falls.
03:19Refineries also switch from expensive summer gasoline formulations to cheaper winter blends.
03:25So under normal circumstances, prices could begin easing in the autumn.
03:29But the geopolitical shock could overwhelm that seasonal relief.
03:33In other words, the calendar is working in Trump's favor.
03:38The oil market isn't.
03:39If the Middle East crisis cools, gasoline prices could fall relatively quickly.
03:44If the conflict intensifies, particularly around the Strait of Hormuz, Americans could see
03:49another wave of increases.
03:51So why this is a political problem for Trump?
03:54Now comes the political part again.
03:57The U.S. midterm elections are scheduled for November.
04:00Republicans are defending their congressional majorities.
04:03And history tells us something important about American politics.
04:06Voters may not understand the global oil market, but they understand the price on the pump.
04:12For a commuter driving 50 to 60 or 70 miles every day, an extra dollar per gallon is not an
04:19abstract statistic.
04:20It is real money.
04:22Take the example of a worker commuting 75 miles a day.
04:26Higher gasoline prices can wipe out hundreds of dollars of monthly savings.
04:30And this comes at a particularly difficult moment.
04:34Americans are already dealing with high costs of housing, food, electricity and health care.
04:39So gasoline becomes another visible symbol of the broader affordability problem.
04:44And that creates an opening for Democrats.
04:47They can make the election argument very simple.
04:49Trump promised economic relief.
04:51Instead, Americans are paying more at the pump.
04:55That message does not require a complicated economic explanation.
04:59People can see that.
05:00It fits on a campaign advertisement.
05:02And it can be particularly powerful in suburban and working class swing districts.
05:07So what can Trump actually do?
05:10This is where Trump's problem gets even more complicated.
05:13The president can put political pressure on oil companies, and he already is.
05:18Trump has been pushing refiners and fuel retailers to help bring prices down.
05:23But there is a limit to what the White House can actually control.
05:27The president cannot simply order gasoline to become cheaper.
05:30The price depends heavily on the global crude market.
05:33And America is part of that global market.
05:36The administration can try several things.
05:38It can encourage domestic oil production.
05:40It can work with the refiners to increase output.
05:43It can release oil from the Strategic Petroleum Reserve if it believes there is a supply emergency.
05:49It can pressure allies in oil-producing countries to increase production.
05:54And most importantly, it can try to end the geopolitical crisis that, in the very first place, is driving this
06:01oil shock.
06:02But each option has limitations.
06:04More U.S. production takes time.
06:07Strategic Reserve release can provide temporary relief, but they do not solve a prolonged supply disruption.
06:12And increasing OPEC-plus production depends on decisions made outside of Washington, which brings us back to Iran war.
06:22The fastest way for Trump to bring oil prices down may ultimately be diplomacy and a reduction in the geopolitical
06:29risk dream.
06:30There is another reason Trump needs to worry.
06:33Gasoline is not just about driving.
06:36It is an economic multiplier.
06:38More expensive fuel means higher transportation costs.
06:41Higher transportation costs mean higher costs of moving food and goods.
06:45Airlines, trucking companies, manufacturers and farmers can all face higher energy bills.
06:51That can keep inflation elevated.
06:54And if inflation remains high, the Federal Reserve has less room to cut interest rates.
06:59So the chain can look like this.
07:01Iran conflict.
07:02Oil prices rise.
07:04Gasoline and diesel rise.
07:05Transportation costs rise.
07:07Inflation rises.
07:09Interest rate pressures rises.
07:11Household budgets get squeezed.
07:13That is much bigger than a petrol price story.
07:16It becomes an economic story and eventually an election story.
07:21So will American gasoline prices continue to rise?
07:25The honest answer is they could.
07:27And the biggest variable is not Washington.
07:30It is the Middle East.
07:31If the Strait of Hormuz remains disrupted and the U.S.-Iran conflict continues, gasoline prices could remain painfully high.
07:38Though the election season could come and go, but the prices might not stabilize.
07:44If tensions ease, seasonal demands falls and oil supplies normalize, prices could retreat.
07:51For Donald Trump, that creates a very narrow political window.
07:54He needs to keep the economy from being overwhelmed by higher energy costs while convincing voters that the pain is
08:00temporary and that his policies will ultimately bring the prices down.
08:05Because by November, Americans may not be voting on the complexities of oil market.
08:10They may simply remember one thing.
08:13How much did it cost to fill the tank?
08:15And that number could have consequences far beyond the petrol.
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