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Gas Prices Top $4 as Middle East Conflict Disrupts Oil Supply

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Gas prices across the United States have surged past a key threshold, placing renewed financial strain on consumers and adding pressure to the broader economy. On Tuesday, the national average for regular gasoline climbed above $4 per gallon for the first time since August 2022, capping weeks of steady increases tied to escalating tensions in the Middle East.

The rise has been swift. Since late February, average prices have jumped by roughly 35%, according to AAA data, following disruptions to oil supply linked to the ongoing conflict involving U.S. and Israeli forces and Iran. Although the United States does not rely heavily on Middle Eastern oil, the global nature of energy markets has pushed domestic prices higher.

Industry analysts say the psychological impact of the $4 mark could alter consumer behavior. “We have this obsession with gas prices because they dictate a lot of ‘Can we drive? Can we do things we enjoy?’ And now some of that is at risk,” said Patrick De Haan, an analyst at GasBuddy.

“As we get to a month of increases and prices are much higher, the amount of pressure on Americans’ budgets and their spending is going to ramp up.”

The effects are uneven nationwide. In California, drivers are paying an average of $5.89 per gallon, while Oklahoma residents pay far less at about $3.27 per gallon. Differences in taxes, refining expenses, and distribution systems continue to shape regional price disparities.

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At the same time, diesel prices have also spiked, reaching $5.42 per gallon—up sharply from $3.76 before the conflict. Because diesel fuels are used for shipping and freight, the increase is expected to ripple through the economy, raising costs for goods ranging from groceries to furniture.

“It’s going to mean more expensive bills for truckers, tractors and trains that move the U.S. economy with diesel fuel. It’s going to mean consumers are likely greeted by rising grocery prices — and broadly speaking, a rise in U.S. inflation.”

Economists are increasingly concerned that sustained increases in fuel prices could accelerate inflation while slowing economic growth. Polling reflects that anxiety; more than half of Americans surveyed by Reuters/Ipsos reported that higher gas prices have already affected their household finances, with one in five saying the impact has been severe.

For President Trump, the situation presents both economic and political challenges. After previously highlighting falling fuel costs earlier in his term, the current surge serves as a visible reminder of the war’s consequences. “It is the biggest headache for whoever happens to be in power when something like this happens,” said Kate Gordon, a former senior adviser at the Department of Energy and now chief executive of California Forward.

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While she noted that presidents typically have limited influence over gas prices, Gordon emphasized that this situation is unusual.

“Usually, a hurricane hits the gulf and gas prices go up, and then whoever’s in power gets blamed for it,” she said. In this case, she added, Trump is “going to get blamed anyway because he’s in power, but also he made the decision to go to war in Iran.”

The administration has attempted to respond with several measures to stabilize prices. These include plans to release 172 million barrels from the Strategic Petroleum Reserve, to ease restrictions on maritime shipping, and to temporarily suspend certain sanctions on oil shipments already in transit. Officials have also relaxed some summertime fuel-blend requirements to reduce pump prices.

Even so, structural factors are pushing prices upward. Seasonal demand is increasing as Americans prepare for spring and summer travel, while the switch to more expensive summer-blend gasoline further adds to costs. Meanwhile, domestic crude futures—though down from their peak during the crisis—remain more than 50% higher than they were at the end of February.

Abroad, countries more dependent on Middle Eastern oil supplies are already taking steps to curb consumption, including encouraging drivers to limit travel.

Experts say meaningful relief is unlikely until global supply routes stabilize. In particular, attention remains focused on the Strait of Hormuz, a critical shipping corridor for oil exports. “Opening the strait is the answer until it’s not,” Gordon said. “It’s the answer until someone attacks it again.”

For now, consumers are left adjusting to higher costs that are difficult to avoid. “There are some things you can change on the margins, but it’s not easy to change where you live, where you work, where you go to school,” Gordon said. “You can be more efficient, but it’s kind of a baked-in cost.”

gas

New Zealand Will Give Cash Payments To Low Income Families Amid Global Fuel Crisis 

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Nearly 150,000 low income families in New Zealand will be receiving a weekly cash payment to help them afford gas amid the global fuel crisis caused by the war in Iran. This is believed to be the first fuel relief package that directly pays citizens in the world since the start of the war, according to reports. 

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Prime minister Christopher Luxon and finance minister Nicola Willis announced this week that about 143,000 families with children will be getting an extra NZ$50 (US$29.20) a week through the in-work tax credit. This credit is, in general, a payment made for low-to-middle-income families with dependent children, and requires at least one parent in paid employment with neither parent receiving benefits. 

An additional 14,000 families who have a “slightly” higher income will also be eligible for these payments, but will receive less money weekly. 

The Guardian reports that this will be temporary, lasting for one year starting in April, or until the price of 91 octane gas drops below NZ$3 (US$1.75) a liter for four consecutive weeks. 

Since the Middle East conflict began, gas prices have increased around 40 to 50 cents a liter. Some stations have even reported running out of gas due to the urgency of citizens trying to stock up. 

As of Tuesday, it’s been reported that New Zealand had 46 days worth of combined gas, diesel, and jet fuel stocks. 

Luxon stated that the priority was to make sure the country had a “sufficient fuel supply.” He made it clear that he was well aware of the impact these increased prices have on the average family and that it was “eating into household budgets.”

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Willis said this new payment policy was directed to families “in the squeezed middle,” meaning parents who were working, not eligible for benefits, and had “modest” household incomes. 

“We cannot control global oil markets or international conflicts, but we can soften the impact on working families who cannot easily avoid higher fuel costs by delivering support in a responsible and well-targeted way,” Willis said.

“But the relief package fails to help those hit hardest by the higher fuel costs,” said Green party co-leader Marama Davidson.

“This package does nothing for [people receiving benefits] and their children, retirees, or unpaid carers, who are all left out entirely. This is a crisis and the government’s response will do nothing for most New Zealanders,” Davidson said. 

Other governments around the world are also taking their own measures to address the rapidly increasing fuel prices and shortages. The Philippines have cut down to a four-day work week, and Sri Lanka is rationing fuel. 

Ireland’s government is working to sign off on cuts to excise duty on fuels to cushion the economic impact from the fuel crisis. Thailand and South Korea have both placed caps on domestic fuel prices, with South Korea also providing additional energy vouchers. 

New Zealand is, so far, the first nation to offer direct cash payments as part of a government financial relief package.

electric car

Honda and LG Team Up To Build An EV Battery Plant In The United States

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In a recent press release, Honda Motor and LG Energy Solution revealed that they are planning to invest $4.4 billion in order to build a new battery production plant for electric vehicles. 

The partners haven’t officially announced where the new production plant will be located, but they are hoping to start construction by early 2023 and prepare for mass production by the end of 2025. 

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“Honda and LG Energy Solution said they picked the US because local production and a “timely supply of batteries” would best position them to succeed in the growing North American electric vehicle market,” according to CNN.

There are ideas that the plant is likely to be built near Marysville, Ohio or Greenburg, Indiana where Honda has huge manufacturing factories located.

The plant is set to produce electric batteries that will be exclusively used for Honda vehicles that are assembled within North America.

“Our joint venture with Honda, which has significant brand reputation, is yet another milestone in our mid- to long-term strategy of promoting electrification in the fast-growing North American market”

Honda’s joint venture with LG is actually part of a larger trend of automakers following Ford, General Motors, Toyota, Hyundai-Kia, Stellantis and VinFast having announced plans for US battery plants. 

With a new US law to start producing more electric cars to cut back on gas, this gives the car manufacturers even more incentive to build the battery plants all across North America.

The new law also includes a tax credit for up to $7,500 that could be used to cover the cost of purchasing an electric car. But in order to receive that credit, the vehicle has to have a battery that was built within North America with 40% of the metals mined or recycled there. 

“Honda is working toward our target to realize carbon neutrality for all products and corporate activities the company is involved in by 2050,” said Honda Chief Executive Toshihiro Mibe.

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Currently, Honda doesn’t have an electric car in their catalog. They are planning on launching an SUV, titled “The Prologue”, in 2024.

By 2030, Japan-based Honda is hoping to have at least 30 electric vehicle models globally and sell exclusively in North America by 2040. 

“Aligned with our longstanding commitment to build products close to the customer, Honda is committed to the local procurement of EV batteries which is a critical component of EVs,” said Mibe. 

The demand for electric vehicles is expected to continuously grow not only in the US but also in other nations due to climate change, pollution and the price of gas continuing to rise.

cars

California Is Looking To Stop Sales Of Gas-Powered Cars In The Future

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With a 2035 deadline, California is set to stop all car, truck and SUV gas-powered sales and switch to electricity or hydrogen power to help transition to climate-friendly vehicles.

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Inflation

Retail Sales Drop 0.3% In May As Federal Reserve Prepares To Hike Interest Rates Further

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According to the U.S. Department of Commerce, retail sales fell 0.3% in May, wiping out any progress made by a 0.7% rise in April. It comes as a 8.6% inflation jump has forced millions to focus their money on food and gas, the latter of which now sits above $5 per gallon nationally.

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Shell Chief Executive Receives 40% Pay Cut Due To Covid-19 Pandemic

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Royal Dutch Shell has cut the pay of its chief executive by more than 40% in 2020 due to the Covid-19 pandemic which dramatically dropped the demand for oil in the world; 2020 is regarded as the year with the steepest decline in demand for oil. Shell reported a loss of about $20 billion for 2020 due to this lack of demand.

Ben Van Beurden, the CEO, took a cut of around $5.8 million in 2020, and the year before he received a cut of around $10 million, marking the second consecutive year in which the chief executive received a major pay cut. His salary was completely halved back in 2019.

Van Beurden also was reportedly forced to cut Shell’s dividend for the first time since World War 2. It’s expected that the company will be cutting 7,000-9,000 staff members across their global businesses as well. These cuts are also the result of the massive financial loss the company is experiencing due to a lack of need for oil and other fossil fuels, as well as the growing need to live a greener lifestyle.

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Shell also announced that its chairman, Chad Holliday, will be stepping down after six years with the company. He will be replaced by the former BHP chief executive Andrew Mackenzie, who also spent six years at his former company. His time with BHP was defined by his coworkers as an “ambitious turnaround in which we were able to streamline operations.”

“Right now it’s a pivotal time for the industry and wider society. I plan to profitably accelerate Shell’s transition into a net zero emissions energy business that would continue to generate substantial value for shareholders, customers and communities alike,” Mackenzie explained. Van Beurden also recently claimed that he was looking forward to working closely with Mackenzie.

“We are emerging from the Covid-19 pandemic with a clear and distinct strategy that I believe will enable us to seize the opportunities presented by the energy transition. I cannot think of anyone better than Andrew to take this role,” he said.

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Oil prices have dropped dramatically since March of last year when the pandemic began. This was initially due to traders adjusting their prospects to cope with the lower demand. Shell cut its spending which lowered its pricing and future pricing as well.

Van Beurden refused to take an annual bonus last year, however, he still received one of about $3.7 million due to his long-term incentive plan which initially gave him a bonus of $8 million before his major pay cut back in 2019.

Oil prices have begun recovering in the early parts of 2021 due to dramatic cuts in production, as well as a rollout of multiple vaccine programs throughout the world that is helping stimulate the economy and return the world to a greater sense of normalcy.

Galaxy

For The First Time Ever, Astronomers Were Able To Watch As A Distant Galaxy ‘Dies’ 

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For the first time in history, astronomers were able to witness the previously unknown phenomenon of a galaxy’s life coming to an end. Galaxies die when the stars that live within them stop forming. 

Using the Atacama Large Millimeter/submillimeter Array of telescopes in Chile scientists were able to watch as a distant galaxy ejected half of the gas it uses to form stars. The galaxy is specifically known as ID 2299, and the light emitted from the stars within this galaxy took about nine billion years to reach Earth.

Based on this timing, astronomers determined that they’re currently witnessing cosmic events that occurred when the universe was only 4.5 billion years old; the universe is thought to be 14 billion years old for context. 

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The galaxy is thought to be losing around 10,000 suns-worth of gas per year. This is significant because that gas is what’s needed for the galaxy to produce new stars. So far astronomers believe ID2299 has lost about 46% of its cold gas, however, the galaxy is still able to quickly form stars at rates greater than what we experience in our own Milky Way galaxy. 

Since ID2299 is still able to successfully produce stars, it’s likely that it won’t die for another few tens of millions of years. Annagrazia Puglisi, lead study researcher and postdoctoral research associate from Durham University in the UK and the Saclay Nuclear Research Center in France, spoke to the press after publishing the study in the journal of Nature Astronomy. 

“This is the first time we have observed a typical massive star-forming galaxy in the distant Universe about to ‘die’ because of a massive cold gas ejection.” 

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According to Puglisi, it’s also possible that ID2299’s demise is the result of a collision with another galaxy. Astronomers observed a large stream of gas and stars that typically only forms when two galaxies come together in a collision, and normally these streams are too far and faint to be seen, however, the scientists ability to see this tail means that the galaxy was likely formed by some sort of collision. 

 If a collision is what is causing this galaxy’s demise, astronomers will need to reconsider existing theories regarding the life cycle of stars and their formation at the end of a galaxy’s “life.” Previous theories claimed that the winds created by star formations would combine with active black holes at the center of a galaxy, which would thus send out materials needed to form stars.

“Our study suggests that gas ejections can be produced by mergers and that winds and tidal tails can appear very similar. This might lead us to revise our understanding of how galaxies ‘die,’” said Emanuele Daddi, study coauthor and astronomer at the Saclay Nuclear Research Centre in France. 

Astronomers were actually working on a survey regarding cold gas in distant galaxies when they noticed the tidal tail of ID2299 and realized just what they were witnessing. Future observations of the galaxy will likely reveal more about the process of gas being ejected from galaxies and how it impacts star formation, but in the meantime, astronomers are celebrating the fact that they witnessed a cosmic event that they’ve only theorized about in the past.

Oil and Gas Plant

How Oil and Gas Companies are Grappling with Climate Change

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Climate change presents a major problem for nearly every industry in the world, but the oil and gas industry is perhaps the most directly affected one. As the burning of fossil fuels is the most significant contributor to the greenhouse gas effect, oil and gas companies remain the target of blame for the crisis around the world. As such, these companies are faced with the challenge of reconciling their responsibility to the planet with their obligation to generate profits. Although the science on climate change and the activities that contribute to it has been settled for a long time, it has only been in the past few years that oil and gas companies have come to an agreement about the nature and urgency of the crisis. How they are adapting to a near-global consensus about the need to reduce carbon emissions, however, is more disparate, with some companies investing in alternative energy solutions and others focusing on improving the efficiency of oil and gas consumption.

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Perhaps the most striking example of the oil and gas industry’s involvement in shaping the future of energy consumption is the Oil and Gas Climate Initiative, which was formed by many of the world’s largest oil and gas companies, and whose members include BP, Shell, Exxon Mobil, and Chevron, to name just a few. The initiative’s stated goal is to “deliver solutions for a sustainable low-emissions future,” and their member companies are “dedicated to the ambition of the Paris Agreement to progress to net zero emissions in the second half of this century.” The initiative’s plan for reaching this goal includes three components: reducing the energy value chain footprint, accelerating low-carbon solutions, and embracing a circular carbon model.

The first objective refers to reducing the amount of methane released into the atmosphere during each stage of the process of energy production, from transport and distribution to usage by final customers. Of all of the greenhouse gases, methane traps the most amount of heat in the atmosphere, making its release a primary concern for oil and gas companies looking to reduce their impact on climate change. The second objective refers to optimizing the efficiency of fossil fuel use by investing in technologies that are more energy efficient and researching new low-emissions pathways for the mid and long-term. The last objective refers to capturing carbon emissions and storing them safely or using carbon in products, and then neutralizing any remaining carbon.

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While the Oil and Gas Initiative is certainly a step in the right direction, the organization has plenty of room for improvement. Though many of the world’s major players in the oil and gas space are represented by the initiative, the organization accounts for only 30% of the world’s oil and gas production. And the initiative is mostly focused on making existing fossil fuel consumption methods more efficient rather than switching over to renewable energy platforms, like wind and solar, though they consider renewable energy as a necessary component of the future of energy production. 

Many critics, however, suggest that the approach taken by oil and gas companies is inadequate, and insist that the transition to the energy economy of the future necessitates intervention from governments around the world. These critics, which include organizations like the Climate Action Network, blame the oil and gas industry for suppressing research about the effects of carbon emissions, and claim that major political change is necessary, as meaningful change will not come from oil and gas companies acting alone. The Climate Action Network, as well as other environmental organizations around the world, call for policies like a carbon tax, government investment in renewable energy, and an elimination of subsidies on oil and gas. That being said, global demand for energy, and specifically fossil fuels, is higher now than it’s ever been, and even the most ambitious plans for reducing carbon emissions still recognize that fossil fuel use must continue in some capacity for decades to come.

Climate

EPA Rollbacks Threaten to Accelerate Climate Change

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On Thursday, the EPA is set to announce rollbacks on regulations on methane emissions, which are a major contributor to climate change. As it stands, oil and gas companies are required by federal regulations to install and maintain technology that inspects and fixes wells, pipelines, and storage facilities with the potential to leak methane. With these regulations gone, companies would have no legal requirement to ensure that excess methane is not released into the air.

Although these changes are required by law to undergo a period of public comment and review, this process is unlikely to change the outcome of the rollback. (In 2017, 99.7% of public comments opposed rolling back net neutrality regulations; the FCC dismantled these regulations anyway, suggesting that governmental agencies’ public comment periods can have little to no impact on their ultimate decisions.) Notably, several companies in the oil and gas industry oppose this regulatory change. While the American Petroleum Institute praised the proposed change in rules, calling it “a smarter way of targeting methane emissions,” Exxon, BP, and Shell have urged the Trump administration to maintain key elements of the regulation.

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While it may seem counter-intuitive for these companies to oppose loosening restrictions on the emission of greenhouse gases, oil and gas companies have given several reasons for supporting environmental regulations. One reason has to do with messaging: as the arguments favoring the belief that climate change is both man-made and potentially disastrous become increasingly irrefutable, oil and gas companies are re-branding themselves as favoring renewable sources of energy. As such, it would be hypocritical for them to oppose environmental regulations. Additionally, the view that natural gas is a cleaner source of energy than oil requires that methane emissions are curtailed as much as possible, as the process of extracting and refining natural gas has a strong potential to cause methane leaks if not handled carefully.

This is not the only case where companies have opposed the Trump administration’s rolling back of environmental regulations that impact their business. This summer, Ford, Volkswagen, Honda, BMW, and Mercedes-Benz teamed up with the state of California to oppose auto emissions rollbacks. These rollbacks, which have not yet been implemented, would reverse a rule requiring automobiles to reach an average of 54.5 miles per gallon by 2025, lowering the standard to just 37 miles per gallon. However, 13 states, including California, have vowed to continue to enforce the regulation, leading to a potential disparity in regulations between states and a splintering of the automobile market. As such, some auto manufacturers have sided with California over the Trump administration, seeking to abide by standards that would allow them to continue producing a single fleet of vehicles for all 50 states.

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Additionally, the Trump administration has sought to roll back regulations on mercury emissions that were instituted by the Obama administration in 2011. As human exposure to mercury leads to serious health problems, the regulations on the permissible amount of mercury in the environment were strict, and as a result of these regulations mercury pollution has fallen by 70 percent. Although coal companies such as Duke Energy opposed the regulation, due to the substantial financial burden of installing the technology necessary for compliance, they now oppose rolling back the regulation, as they fear that the money they spent will go to waste if they are not obligated to continue monitoring and reducing mercury emissions.

While somewhat surprising, the shift of oil, gas, and automotive companies towards a more environmentally friendly and consumer-oriented approach is part of a larger trend created by the vacuum of leadership in government combined with worsening environmental and economic conditions. Recently, Business Roundtable announced that many of the world’s major CEOs would shift their focus away from prioritizing shareholders to prioritizing stakeholders in an effort to ensure a healthier and more inclusive economy. This announcement was made in the context of tax cuts that benefited the wealthy at the expense of the middle and lower classes; fearful that the rise of income inequality would lead to an unstable economic situation, the free market reacted by reorganizing its priorities to support a growth in consumer’s spending power. A similar philosophy is driving energy companies such as BP to focus on “green” solutions for harnessing energy. The long-term viability of this practice of self-regulation remains to be seen.