David M. Drucker: High gas prices will haunt the GOP even if the war ends soon

Summary

There’s still more political fallout for the GOP courtesy of the Iran war: Even if the conflict ends soon, voters could be grappling with pain at the gas pump deep into midterm election season, as Republicans struggle to defend razor-thin majorities in Congress. The influence American presidents have on oil markets is often difficult to discern. But in the case of President Donald Trump, the impact of his decision to team up with Israel for ongoing military strikes on Iran has been plain to see. With the war and the resulting closure of the Strait of Hormuz ongoing, crude oil is trading north of $100 per barrel. Americans, still beset by anxiety over the cost of living, are now paying more than $4 per gallon on average for gasoline, compared to roughly $3 per gallon before Operation Epic Fury started Feb. 28. That has erased a lone bright spot on affordability for the Trump administration, one rarely disputed even by Democrats. And when it comes to the cost of a barrel of oil, what is easily done is not easily undone, as Neale Mahoney, director of the Stanford Institute for Economic Policy Research, explained to me. “You have a ‘rockets-and-feathers’ phenomenon at the pump — something we’ve seen time again,” he said. What does that mean? When factors like war or other constraints that hamper supply cause oil prices to spike, the per-gallon cost of gasoline rises quickly, “like a rocket.” And when the pressures are removed from the equation, “Gas prices float down slowly, like a feather,” Mahoney said. In other words, even once Middle East oil producers get their facilities up and running at full capacity or the Strait of Hormuz is reopened to normal shipping traffic, “It will take time for prices to settle back to normal in the U.S.,” he added. But that’s not the only headache related to higher oil prices that Trump — and by extension, Republicans in Congress — are facing as they struggle to hang on to their majorities in the House of Representatives and Senate. The economic pain is spreading, impacting consumers across multiple sectors. Jet fuel costs have surged, driving airfares higher. Prices for diesel fuel and urea, a crude oil byproduct used to fertilize crops, are also climbing, taking some food prices with them. Based on historical trends and projections for the price of crude oil, Mahoney estimates average pump prices could rise through June and then possibly relax over the summer — but at a snail’s pace. And even if prices begin to ease, the rate at which oil futures are trading suggest costs are likely to remain elevated. That means consumers could continue to pay more at the pump and face related higher costs for several months, potentially right up until midterm voting begins. The president may truly believe his policies have reduced the cost of living to acceptable levels. As he said in a speech from the White House earlier this month: “We were a dead and crippled country after the (Biden) administration, and (I) made it the hottest country anywhere in the world by far, with no inflation.” But it’s abundantly clear that a majority of voters disagree with him, especially regarding that latter assertion. That’s the political challenge facing Republicans — and the political opportunity for Democrats — this fall, even if Trump were to have pulled the plug on the Iran war by the time you read this column.