Everyone seems to believe this crisis is temporary, but look at who just warned this crisis is going to last more than a year.
Wartime Fuel Prices Will Last For More Than A Year, DOE Says
March 18 (King World News) – Gerald Celente: The price of gasoline and diesel fuel are unlikely to return to prewar prices in the U.S. until mid-2027, the U.S. energy department warned last week.
The U.S. national average price of gasoline was $2.94 before the U.S. and Israel attacked Iran. The price will not return to that level until late in 2027 at the earliest, the department’s analysis concluded. Diesel fuel, which is to industry what gasoline is to cars, is expected to remain above its prewar $3.81 average until at least July 2027.
More expensive gasoline will hit low-income households hardest because they spend a greater proportion of their budgets on fuel, Cox Automotive analyst Stephanie Streaty wrote in a report.
The average U.S. price for gasoline was $3.76 late on 16 March. Diesel had crossed above $5.
Jet fuel’s price jumped 60 percent at the war’s beginning, reaching $3.95 a gallon. The price soared to $6.88 on 16 March. Fuel makes up about a quarter of airlines’ operating costs.
The higher price will have a “meaningful” impact on ticket prices that will “probably start quick,” United Airlines CEO Scott Kirby said last week in comments quoted by the FT.
Donald Trump pledged to cut fuel prices in his 2024 presidential campaign, a key element in his promise to reduce the cost of living. Pump prices are now higher than they were during his two presidential terms.
The “war tax” on oil and its products will continue to push prices higher across all economic sectors, raising the chances that inflation will re-energize and that central banks will raise their interest rates to try to hold it in check.
“We’ve got a lot of costs moving through the system,” oil analyst Tom Kloza at Kloza Advisors, told the Financial Times. “We are looking at some really scary inflation ratings, pervasive inflation throughout the country.”
The trucking industry, which literally runs on diesel, will pass much of its increased fuel costs to consumers, Bob Costello, the American Trucking Association’s chief economist, said to the FT.
Farmers also face higher fuel costs for their tractors and other equipment as planting season begins. Natural gas, the price of which recently doubled in Europe, is a key ingredient in fertilizer…
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Some companies have suspended fertilizer sales, according to the American Farm Bureau Federation.
Those higher input costs for farmers, which include trucking harvests to processing plants and then to warehouses, will ripple through the U.S. food system, raising grocery prices for households.
Not only grocery stores but all retailers will feel the pinch both directly in higher prices they pay to stock their shelves but also because consumers will have less disposable income to spend.
IEA CUTS 2026 OIL DEMAND GROWTH FORECAST
With the Strait of Hormuz effectively closed to the shipment of oil, the International Energy Agency (IEA) has slashed its forecast for oil supply growth this year from 2.4 million additional barrels a day to just 1.1 million.
All of the additional supply is expected to come from producers outside of the Gulf region.
Because of the war, the IEA expects the world oil supply this month to fall by eight million barrels a day to 98.8 million, the least since the first quarter of 2022 and effectively erasing much of the glut that had been projected to occupy most of this year.
The eight-million-barrel reduction will be the amount of oil Gulf producers are shutting in because of the war and the strait’s closure, the IEA calculated. The countries already had cut oil flows by 10 million barrels; some is being rerouted over land.
“The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” the agency said in its 12 March monthly report.
The price of global benchmark Brent crude flirted with $120 when the war began but has since settled down, with oil for April delivery trading at $100.21 at 5 p.m. U.S. EST on 16 March. West Texas Intermediate, which sets levels for U.S. domestically produced oil, traded close to $120 on 9 March but has retreated and was priced at $94.34 on 16 March.
On 12 March, the IEA announced that several member nations will release a cumulative 400 million barrels of oil from their strategic reserves to help temporarily lower oil prices.
The release will be A “significant and welcome buffer,” the IEA added, but is only a “stop-gap measure” if the strait is not made safe again in the near future.
The loss of Mideast oil will be eased partially by a rise in North American production after cutbacks during the winter freeze and Kazakhstan’s return to the market after several disruptions last year.
Demand for air travel also is down, cutting airlines’ need for fuel, and the loss of oil has scaled back demand for liquefied petroleum gas by a million barrels a day this month and next.
TREND FORECAST
Oil demand will shrink not only because the war has made it less available but also because consumers will divert additional income to fueling their vehicles and heating their homes and offices. That leaves them less to spend on other things, which will cause manufacturers and services to lose business, reducing their need for energy.
If anyone ever doubted that an over-reliance on oil is a national economic and military security issue, the war on Iran should already have removed those doubts.
Again, the higher energy prices rise, the deeper economies will decline… and so will the markets. Prepare for the Greatest Depression… followed by the official beginning of WW III. As Gerald Celente has long noted, “When all else fails, they take you to war.
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