Gas is just the start: What else the Iran war could soon cost you

Gas is just the start: What else the Iran war could soon cost you

Since the US and Israel launched strikes against Iran, oil and gas prices have surged, becoming a focal point for both financial markets and everyday consumers. Yet this is merely the beginning of a broader trend that could elevate the cost of numerous other goods. As oil prices climb, the expenses related to shipping tangible products globally have already risen, and this trend is expected to intensify with the war’s duration.

According to Brian Bethune, an economics professor at Boston College, businesses have already absorbed most of the costs from tariffs imposed by the administration in the previous year. This leaves them with limited flexibility to pass on the additional transportation expenses, which are largely tied to diesel prices. For example, FedEx Ground and home deliveries trigger a 21.5% fuel surcharge when diesel reaches $3.55 per gallon. As of March 9, diesel prices stood at $4.86 per gallon, an increase of almost $1 from the prior week, per US Energy Information Administration data. This means a 24.75% surcharge will apply for the upcoming week.

Similar adjustments are in place across all major freight systems—air, rail, and ocean—based on the type of fuel and its cost. Grocery stores are likely the first retail spaces where consumers will feel the impact of higher fuel prices, particularly in sections like produce, meat, and dairy. Deborah Weinswig, CEO and founder of Coresight Research, a supply chain and retail advisory firm, explained that perishable items are more susceptible to price hikes since companies can’t stockpile them as easily.

“There’s no free lunch. It’s going to show up somewhere,” Bethune told CNN.

Outside of grocery stores, price increases may take longer to manifest. Weinswig noted that businesses have been preparing for this by building inventory ahead of Trump’s tariffs, which led to stockpiling. As a result, they now have substantial supplies on hand. However, with fuel costs climbing, companies might need to explore alternative cost-cutting measures. In 2022, when the Russia-Ukraine conflict began, oil prices spiked, exacerbating inflation. At that time, many businesses opted to reduce product sizes without altering prices—a tactic called shrinkflation.

Now, with consumers already scaling back spending, companies may struggle to implement such subtle price changes. This could push them toward more drastic actions, like layoffs, to offset the financial strain caused by persistent fuel price increases.