Beyond the Gas Pump: How the Iran War Is Repricing Everything
Gas prices are the headline, but the real economic toll from this conflict is a lot harder to see coming.
Here’s what the coverage of the Iran war mostly gets right: gas prices are up. Crude has crossed $110 a barrel, and Americans have spent an additional $8.4 billion in fuel costs since the strikes began.
But stopping there misses the bigger economic story, because the real problem is not just that it costs more to fill up your car. It’s that when oil prices jump, the increase moves almost immediately into the parts of the economy that depend most heavily on fuel, especially diesel, jet fuel, fertilizer, shipping, and freight. That is how a fuel crisis turns into a grocery problem, a travel problem, a delivery problem, and eventually an inflation problem.
That context matters, especially because this is all happening in an economy where so many basic costs are already stretched. Food does not get more expensive in some vague way; it gets more expensive because farm equipment runs on fuel, fertilizer prices rise with oil and gas shocks, and transporting food across the country gets more expensive. The same goes for flights, shipping, and household goods. By the time most people feel it, it no longer looks like an oil story, even though that is exactly what it is.
And of course, like with most oil stories, while households are bracing for higher costs, oil executives are cashing in. Chevron’s CEO alone made $104 million selling personal shares between January and March of this year, part of a broader $1.4 billion wave of insider stock sales by oil executives in the first quarter, which is a pretty striking contrast when everyone else is being told to prepare for another round of higher prices
So yes, gas prices are up, and the coverage is right to say that. But this Substack is about the rest of it, the less obvious ways a fossil fuel price spike works its way through daily life, and why the fallout from an oil crisis is always bigger than the number on the gas station sign.
The Grocery Shock is Coming
Before the war, the USDA projected food prices would rise about 3% in 2026. Their revised March forecast puts that number at 6.1%, with bread and cereal up 10%, ground beef up 7–8% by June.
Higher fuel prices hurt the supply chain, but it’s the fertilizer shortage that’s really going to drive up your grocery bill. Modern agriculture runs on fossil fuel-based inputs, and when oil and gas prices rise, fertilizer follows.
One-third of global seaborne fertilizer trade passes through the Strait of Hormuz, which is now effectively closed to tanker traffic. The chemicals that agriculture runs on — urea, ammonia, phosphates, sulfur — have all spiked, right at the start of spring planting season in the northern hemisphere. Urea prices are up 30% in the last month alone and at the port of New Orleans, the import price is up more than 25% since late February.
The American Farm Bureau Federation wrote to Trump warning of a ‘production shock’ that threatens national security, asking the president to deploy the U.S. Navy to escort fertilizer shipments through the Strait of Hormuz.
Food prices lag fertilizer disruptions by months. The crops being planted right now, at inflated input costs, on compressed margins, are the groceries that will arrive in supermarkets this fall. A best-case scenario puts food bills 12–18% higher, adding roughly $100 or more a month to a typical household’s budget. And that’s if things don’t get worse.
Airlines Are Already Passing the Costs on to You
Jet fuel is up roughly 106% versus a month ago. It accounts for about 25% of airlines’ operating costs, and more for budget carriers, which means price increases land hardest on travelers with the least flexibility.
The industry isn’t waiting to see how this plays out. Air New Zealand was one of the firsts to announce increased ticket prices due to the war, Cathay Pacific is doubling its fuel surcharge from $72.90 to $149.20 per ticket, and Air France-KLM, Lufthansa, United, Korean Air, Turkish Airlines, Thai Airways, and more than a dozen others have announced price hikes or surcharges in the last few weeks.
We’re sorry to say, if you have travel planned this summer, the window to book at pre-war prices has mostly closed.
Higher Shipping Costs are a Tax on Everything
The Postal Service announced an 8% surcharge on packages starting April 26, running through January 2027, citing spiking fuel and transportation costs. That’s one of the few increases that comes with a formal notice; most don’t
Maritime war risk insurance premiums — the coverage ships need to sail through conflict zones — have surged by more than 1,000% in some cases since the fighting began. At least seven vessels have been damaged in the Gulf, with potential industry losses from those ships alone reaching $1.75 billion. Insurers are pricing that risk into every cargo that moves through the region.
That cost gets folded into the price of everything that moves on water, which is most of what we buy. Appliances, clothing, electronics, anything that started its life on a container ship will get a little more expensive than they were last month, and will be a little higher still next month.
Mortgage Rates are at a Five-month High
The average 30-year fixed mortgage hit 6.43% last week — up from 6.3% the week before, and the highest since October. Mortgage applications fell 10.5% and refinance applications fell 14.6%.
Mortgage rates track the 10-year Treasury yield and the war is reigniting inflation fears, which pushes yields up, kills the prospect of Fed rate cuts, and keeps borrowing costs elevated. The housing market was already broken for most people and this makes it worse. And if you rent, fewer people who can afford to buy means more competition for rentals, and landlords carrying debt at higher rates will inevitably pass those costs onto renters.
In Southeast Asia, the Stakes Aren’t Bills. They’re Lives.
Southeast Asian nations are heavily dependent on Persian Gulf oil, with Thailand sourcing 74% from the region, Vietnam 87%, and the Philippines 96%. Some of the most climate-vulnerable places on earth are heading into summer, and the electricity shortages have already begun.
Cambodia, Myanmar, and Thailand could see temperatures above 105 degrees on more than 138 days a year by the end of the century. Those temperatures are arriving this spring and summer against the backdrop of a worsening energy crisis. When utilities cut power to manage costs, the people most at risk are the ones who can’t afford backup options. For them, a working air conditioner is not a comfort, but a survival tool.
And when natural gas runs short, countries burn coal instead. Thailand has already ordered its coal plants to run at full capacity, reversing years of decarbonization progress. Every country making that call is locking in higher emissions for the years it will take to rebuild cleaner infrastructure. `
We’ve Seen This Before
In 2022, when Russia invaded Ukraine, oil prices spiked, inflation climbed, and ordinary people paid more for gas and groceries and heat. ExxonMobil made $77.8 billion in profit, more than double the year before. But when Congress proposed a windfall profits tax that was supported by roughly 80% of Americans, it went nowhere.
Now crude oil is above $110 again. The same companies are posting the same kinds of earnings calls and the same families are absorbing the same costs. We’re in the early innings of the economic fallout from this war, this time, let’s Make Polluters Pay.
Big Oil is already counting its profits from this crisis. Congress needs to hear from you. Sign our petition demanding a windfall profits tax on Big Oil now — and share it with everyone you know.