How the spike in gas prices could ripple through the global economy

[0:00] The steep rise in gas prices because of this war is the second largest spike in three decades, [0:05] and it is hitting Americans' wallets. Many have told us how they're now scrambling to fill their [0:11] own tanks. My name is Samantha Lott. I currently live in Denton, Texas. I'm Jim Lawrence. I live [0:17] in Omaha, Nebraska. My name is Alexis Mims. My name is Jamie Pardue, and I live in Kailua-Kona, [0:23] Hawaii. I'm Jonathan Tipton-Myers. I'm a full-time rideshare driver. As soon as this war started, [0:30] gasoline prices jumped up minimum 50 cents, but in certain areas it was a dollar as well, too. [0:36] My husband and I are making an effort to combine any trips that we take into town or to stores [0:43] so that we aren't driving unnecessarily. I don't think it ever occurred to me that our gas would [0:49] be over $5 a gallon. You know, we are struggling. Now it's not just the groceries that are expensive, [1:01] but now... [1:01] Now it's the gas that is out of control. [1:03] I am a community mental health social worker. As I'm sure you know, I do not make a lot of money, [1:09] and so having to use my own car and drive a lot around two different counties, [1:15] I'm buying a lot of gas. Then in order to make ends meet as well, I have to deliver groceries [1:20] on the side in the evenings and the weekends. I'm filling up my tank every other day, [1:25] and I'm having to pay like $40 to $50 to do so. Any money that I get from my, [1:31] like, daytime job is usually a month late for reimbursement, [1:35] and so I'm having to figure out how to make that money stretch and like, [1:39] what kind of food am I going to eat this month, that type of thing. [1:42] Dr. It's really anxiety ridden right now times for me and a lot of other people, [1:48] especially people that are single and are having to pay all of their household [1:52] costs themselves. It's really difficult. [1:54] Right now my income is tied to the markets, [1:56] it's in my retirement accounts. And so with the volatility of gas. [2:01] ... vlog [2:01] volatility of the market and one goes up and your bank balance goes down and that really is the most [2:07] concerning thing about the future all of this needs to stabilize in hawaii so much of what we [2:15] have purchased in the stores is imported and so it isn't really just the cost of gas that is going to [2:22] be impact our community it's going to be the cost of just about everything we're constantly trying [2:28] to calculate whether a ride can actually be profitable for us so if you add on an increased [2:33] gas price it just makes making those decisions even more difficult and at the end of the month [2:39] that's a significant raise in your actual price in your anxiety in your ability to drive safely [2:45] and maintain your car and do your job my son is three hours away in college and my daughter is [2:53] 30 minutes away the amount of gas is too much to go ahead and travel at this time so [2:58] we are foregoing plans for any type of get-togethers um but thankfully we have modern [3:05] technology so for now we just keep in touch that way i don't really do a lot of things other than [3:11] work just because i can't afford to and that's really sad because in order to have like a well [3:16] balanced life people need to be able to go do things um support local businesses hang out with [3:21] their friends and those are kind of luxuries at this point that i just like truly can't afford [3:27] so how long are you going to be in the [3:29] world for the next 10 years and how long are you going to be in the world for the next 10 years [3:33] and how long are you going to be in the world for the next 10 years and how long are gas prices [3:37] expected to stay high and more broadly how bad a shock will this war deliver to the global economy [3:43] for that we turn again to cliff cupchin he is chairman of the eurasia group which is an [3:48] international consulting firm cliff so good to have you back on the news hour so you've heard [3:53] from these people about how difficult it is for them just to fill their tanks gas is over four [3:57] dollars a gallon brent crude at over 118 a barrel if this war continues as the president of the [3:59] world has said tonight even for a couple more weeks or maybe longer how much worse could this [4:04] get it could get a lot worse the straight of form moves is so critical to the international economy [4:14] for oil for lng for helium for chips for food for fertilizer it is just a choke point for [4:21] the international economy i don't think that for the foreseeable future i mean this [4:27] war i think is going to get worse judge president trump by his actions which [4:32] i think is going to get worse judge president trump by his actions which [4:32] more equipment to the gulf not by something he might have said today [4:36] about not caring about opening the gulf so i think this is going to be a stranglehold on the economy [4:43] it's going to rise prices and raise prices in many sectors and stoke inflation in countries around the [4:49] world it's a real problem you touched on a few of those other products that come through the gulf [4:54] apart from energy supplies what other industries will those mostly affect well again helium which [5:02] is critical to making advanced chip [5:04] 갈 messenger [5:05] uh aluminum petrochemicals fertilizer [5:10] and food prices those are the main ones but you know that's a whole lot [5:15] and and especially for countries that import food uh it's going to be a real battle to keep [5:21] the books balanced and to uh you know keep inflation under control do you think that that [5:26] consumers or maybe even more importantly the market has has taken on board this idea that [5:33] this could get so much worse than the old 21st century there we go [5:34] some of these negro materials definitely will have a very intense impact and uh a lot of touch [5:34] can actually lead to Operation science right mary's giving a lot more labour intensive [5:34] No. Unfortunately, I think that markets, which I can speak to, consumers is more broad, [5:47] but markets have had their head in the sand. I think markets still have their head in the sand. [5:53] The market rallied today in part on President Trump's comments that he could end the war [5:58] without opening the Strait of Hormuz. That's just really wishful thinking. President Trump also sent [6:05] a third aircraft carrier to the Gulf today. He's sending more troops to the Gulf. I think markets [6:12] are in denial that there's a strong chance we get ground forces, U.S. ground forces in Iran, [6:20] and that prices go up even further towards the 130 level. It's $130 a barrel for Brent. [6:26] I mean, it's going to get bad. [6:30] Do you really believe, judging by what you're saying, that this conflict will escalate, [6:34] that despite what the problem is? [6:35] I do. I do. President Trump has, again, I don't put a judgment on it, but he's now [6:46] attacked Iran twice in the middle of ongoing negotiations. I think that as an analyst, [6:55] it's just not useful to track his day-to-day words. It's much more useful to track the [7:02] administration's day-to-day movements, which is putting men and a whole lot of metal and hardware [7:08] into the region. So, yes, I think it's going to get worse. It may not go on more than two or three [7:13] weeks, but I think we're going to see a lot of combat and bombing before then. [7:18] WILLIAM BRANGHAM. The president, again, reiterated this point, [7:22] that if nations are not willing to help reopen the Strait, and they're thirsty for more oil, [7:29] that they ought to just buy that oil from the United States. Is that a realistic exchange? [7:35] DAVID BROOKS. No. Global markets are — energy is a global market. [7:40] It's fungible. Barrels are interchangeable. Energy prices are going to stay high as long as the [7:48] Strait of Hormuz is closed. And alternative sources are hard to come by, especially for LNG. [7:56] So the president's comments really don't speak to how energy markets work, unfortunately. [8:01] WILLIAM BRANGHAM. All right. That is Cliff Kupchan of the Eurasia Group. [8:04] Always great to hear from you. Thank you so much for being here. [8:07] DAVID BROOKS. Thank you, sir. [8:22] WILLIAM BRANGHAM. Thank you so much for having me on the show.