Major economists, from former New York Times columnist Paul Krugman to Justin Wolfers at the University of Michigan, are warning that the longer U.S. President Donald Trump’s war with Iran drags on, the harder it will hit American consumers. According to Krugman, higher oil prices will make a wide range of goods more expensive — as those goods have to be physically transported.
Trump and his allies are trying to calm down the markets about oil prices. But according to Politico reporters Scott Waldman and Eli Stokols, Trump’s attempt at damage control could be making things worse.
In an article published on April 28, Waldman and Stokols explain, “Energy experts say another oil price spike is coming — and it may be made worse by the president’s social media posts. President Donald Trump has repeatedly spurred temporary dips in oil prices by claiming, on Truth Social, that the Iran war is near an end and that U.S. oil production would ensure sky-high gas prices would soon retreat. The jawboning has mostly worked. Even as the global price of oil has crept up over $100 per barrel on the futures market, it is significantly less than the $140 per barrel spot price, or what it would take to buy a barrel today.”
The Politico reporters continue, “But the president’s promises can only work for so long. Supply of oil — especially in Europe and Asia — is dwindling, and a price shock is coming, said Dan Pickering, chief investment officer at Pickering Energy Partners.”
Pickering told Politico, “There’s a day of reckoning coming. It will be painful because I can tell you that the stock market’s ignoring this.”
Rosemary Kelanic, director of the Middle East Program for Defense Priorities (a libertarian think tank) is sounding the alarm as well.
Kelanic told Politico, “By talking down the market so effectively, when the price spike becomes inevitable, it’s going to hurt way worse because we’ll have lost weeks or even months of time where producers could have been ramping up output.”
Emma Anderson of the Washington, DC-based Stimson Center (which focuses on foreign policy research) predicts that the worst inflation is yet to come.
Stimson told Politico, “Prices at the pump are going to go up over time. The costs of goods are going to go up as diesel goes up. Shipping will get more expensive. Trucking will get more expensive. The things you buy at the store will get more expensive.”