After Michigan gas prices fell to nearly $4 a gallon, the statewide average for gasoline jumped 20 cents – overnight – to $4.22 a gallon in response to news of escalating armed conflict with Iran and surging crude oil prices.
How high gas prices will go remains to be seen as the United States and Iran traded fire this week on ships near the Strait of Hormuz. Iran on Wednesday, Sept. 9, said it attacked 10 ships, and the United States – which has blockaded Iranian ports and has enacted economic sanctions – said it sank five Iranian oil tankers.
Reuters, in its report of the exchange, described it as the "biggest declared wave of tit-for-tat attacks on shipping by both sides since the start of the six-month-old war," which sent oil prices higher
and diesel fuel to a new national record of $5.94 a gallon.
For Iran, oil is both a key source of income and its leverage over the United States. By asserting control over the flow of oil out of the Strait of Hormuz, Iran is also affecting the world economy and, potentially, increasing voters’ tolerance of the war and higher gas prices.
In Michigan, gasoline hit an all-time high of $5.22 a gallon in 2022. Diesel, however, just topped out this year in March at $6.21 a gallon, a price even higher than the national all-time average. The new state average for regular gasoline on Wednesday was $4.22 a gallon, and $5.90 for diesel.
More than being an escalation of the conflict, those watching the war, global energy crisis and petroleum industry are worried that Iran, as it faces economic pressure from the blockade and sanctions, is signaling it is now willing to take more military risks.
But in terms of the economy, the price of diesel fuel especially matters because it influences the price of goods even more because it fuels the trucks, trains and ships that deliver everything from the food you buy at the grocery store to the Amazon packages that arrive at your doorstep.
Gas prices, which AAA tracks daily, had been dropping as the traditional summer travel season ended and demand was expected to decline too, but the international price of oil hit $100 a barrel on Wednesday, Sept 9, with worries it could go even higher if tensions mount.
West Texas Intermediate crude was also up, at about $95 a barrel.
Iran also said it fired ballistic missiles at a base used by U.S. forces in Jordan, putting American lives at risk, which the administration has sought to downplay. Last week, U.S. Commerce Secretary Howard Lutnick apologized for saying no Americans had died in the Iran war when, so far, 18 service members have been killed.
Contact Frank Witsil: 313-222-5022 or fwitsil@freepress.com
This article originally appeared on Detroit Free Press: Michigan gas prices jump 20 cents overnight as Mideast tensions rise
