Twenty percent of the world’s oil and gas production remains bottled up behind the Strait of Hormuz. In Asia, schools are closing. In Europe, flights are being canceled. In the United States, the pain is mainly felt at the gas pump. As of Tuesday, the national average price hit $4.48, according to AAA, up from less than $3 before the war. The Federal Reserve Bank of Dallas projects that the cost of a barrel of crude oil could top $167, equivalent to at least $5 per gallon based on historical trends, if the Strait remains closed through September. That might be conservative. Major banks, including Macquarie, warn that spot prices for crude may peak at $200 per barrel by early summer. Based on past energy shocks, that implies U.S. gas prices could crack $7 a gallon, potentially high enough to trigger a global recession.
“The market is saying that this will solve itself within a month,” said Lars Lysdahl, a partner at the Oslo-based consulting and research firm Rystad Energy, “which I don’t believe.” Even if the Strait reopens tomorrow, oil prices are likely to stay high until next year, perhaps longer. Damaged refineries and other infrastructure will take years to repair. The middle of a global energy crisis is a good time to ask yourself: Should I break up with the gas pump for good? The surge in oil prices is shifting the math for EVs in ways that may change the next car you buy. This wouldn’t be the first oil shock to transform personal energy decisions and reorder the global economy. The 1970s oil crisis created an enormous market for more-efficient cars that transformed the auto industry. Between 1975 and 1985, the average fuel economy of a new U.S. vehicle surged from roughly 13 to 21 miles per gallon, according to Environmental Protection Agency data, fueling the rise of Asian automakers that dominate global vehicle sales today. Could rising gas prices spark a 1970s-era renaissance for ultraefficient vehicles like EVs? If you know where to look. The savings are real, just not evenly distributed. Here’s how to never think about the Strait of Hormuz at the pump again.
Are you changing your driving plans? Write me at climatecoach@washpost.com. I read all your emails.
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