A study by the Watson Institute at Brown University estimated that higher energy prices caused by the Iran war will cost U.S. consumers about $100 billion, with the additional bill rising at a rate equivalent to $1 million every two minutes.
Diesel and gasoline drive the increase
The additional cost borne by the average U.S. household has exceeded $760 since the war began on February 28, based on 131 million households across the United States, with gasoline accounting for the largest share of the increase.
Diesel reached $5.90 per gallon, up 60% year on year, according to data from the American Automobile Association, or AAA. Rising diesel prices, which affect the transportation and shipping sectors, are driving up the cost of moving goods and traveling, adding to inflationary pressures.
In the gasoline market, the national average reached $4.15 per gallon, exceeding $4 during the Labor Day weekend for the first time. That compares with the previous record for this period of $3.82, set in 2012.
Costs vary across states
Consumers in Texas bore the largest share of the additional gasoline and diesel costs, at $11 billion, followed by California at $8 billion and Florida at $5 billion. The average gasoline price in California reached $5.86 per gallon, compared with $5.39 in Hawaii.
Broader pressure on the U.S. economy
The increase in energy costs comes as U.S. President Donald Trump has said Americans are prepared to tolerate higher prices to prevent Iran from acquiring a nuclear weapon, while inflation remains one of the top issues concerning U.S. voters.
Price pressures are coinciding with continued declines in the volume of oil flows from the Middle East, as well as the effects of the war in Ukraine and Ukrainian attacks on Russia’s energy infrastructure, particularly in the diesel market. The study’s estimates suggest that elevated fuel prices could persist for longer, magnifying the war’s impact on household budgets, transportation and prices across the U.S. economy.
