As of March 16, the average price for a gallon of regular unleaded gasoline is approximately $5.53, a 20.5% increase since the start of the month, according to the American Automobile Association (AAA). This is largely due to the ongoing conflict in Iran and the resulting blockade of the Strait of Hormuz, through which 20% of the world’s oil passes every day.
While the global conflict has drastic consequences for international security, its ripple effects are felt worldwide. Local students and consumers are feeling the immediate financial strain of a war 8,000 miles away.
To understand why gas prices have so drastically risen recently, one has to look at a narrow waterway between Oman and Iran. The Strait of Hormuz is the world’s most important oil chokepoint. At its narrowest, the shipping lane is only two miles wide, yet about 20 million barrels of oil pass through it per day.
The current conflict has effectively halted this flow. Following the launch of joint airstrikes on Feb. 28, tanker traffic through the strait has dropped to a fraction of its normal volume.
According to the International Energy Agency (IEA), the crisis has led to a “near standstill” in tanker movements, forcing Middle Eastern producers to cancel shipments and shut down oil fields as regional storage tanks reach their maximum capacity.
Carlmont business teacher John Rowe offers an explanation as to why the gas prices are so volatile.
“Just in general, whenever there’s some uncertainty in the Middle East, the gas prices always start to rise,” Rowe said. “Iran has been doing some things to try to choke off the supply of oil by closing the Strait of Hormuz.”
Rowe also stated that physical damage to the supply chain has increased the price shock. “There’s been a lot of attacks on oil tankers that have been sunk, and then there’s also been some oil fields that have also been attacked. So it’s pretty much a huge mess over there,” Rowe said. “The oil prices are a reflection of everything that’s going on.”
Beyond gas prices, the conflict in Iran has other consequences on everyday life. Deepak Gupta is a full-time investor with an active portfolio that contains shares in Chevron and other oil refineries. According to him, the economic fallout extends far beyond the gas station sign.
“When energy prices increase, that means inflation is going to increase because energy is part of everything, from food to plastic, any materials, packaging, and transportation of materials,” Gupta said.
Energy prices rise during conflict because the sudden decrease in global supply meets a constant demand, forcing prices up as buyers compete for a limited number of available barrels.
Gupta also noted that byproducts like helium are being stalled, which could trigger a tech crisis.
“Helium gas is used in the production of semiconductor chips,” Gupta said. “If 40% of the helium for the world is suddenly not available because it is stuck behind the Strait of Hormuz, companies can’t produce enough chips.”
Students are feeling the blow of these increased costs as well. Carlmont senior Gregory Duffy has been driving for three years and has noticed a $1.80 increase in price per gallon from January to March.
“I was annoyed because now I have to force myself to drive more efficiently to stretch my tank,” Duffy said.
That same price spike hitting Duffy’s tank is also influencing the financial sector. Investors are reassessing the value of tech companies amid high energy costs, while also seeing the share prices of oil refiners like Chevron and Valero surge as they profit from higher margins.
“The valuation and the stock prices are a reflection of those companies’ future earnings. When new news comes out, they attempt to see how it could affect those companies in the future,” Gupta said. “In the short term, there can be exaggerations and extreme knee-jerk reactions, which are a reflection of extreme fear or extreme exuberance.”
Furthermore, the U.S. Energy Information Administration (EIA) recently raised its Brent crude forecast, a global benchmark, to an average of $91 per barrel for the second quarter of 2026, reflecting this heightened risk.
“So, it’s a great economics lesson too, right? Because if we have an increased supply, we’re going to lower the prices. If the supply is going down because of these issues that are going on, then we’re going to have a shortage, and we’ll see an increasing price,” Rowe said.
The conflict shows no signs of resolution, and neither does the volatile gas market.
“With oil demand, there is a lot of price inelasticity. People will pay any price because we’re forced to,” Duffy said.
