The U.S. and Iran have reached a fragile ceasefire, but despite the long-awaited reopening of the Strait of Hormuz, the future of the ceasefire remains uncertain, and American families are still facing real economic consequences at the gas pump, in grocery store aisles, and on their electric bills.
Gasoline prices have increased by more than 30% since the war began, adding hundreds of millions of dollars in additional daily costs. Fertilizer prices have jumped by as much as 50% ahead of planting season, raising the risk of higher food prices in the months ahead. When farmers can’t afford today’s fertilizer prices, many scale back production or plant fewer acres, leading to lower yields, tighter supplies, and ultimately higher prices on grocery store shelves.
But the greater risk hasn’t yet shown up on receipts: a widening set of disruptions across energy, agriculture, manufacturing, and transportation that is just beginning to work its way through the economy.
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Disruptions to the Strait of Hormuz, through which 20% of the world’s oil supply is transported, are already driving up oil and gas prices. Natural gas accounts for around 43% of our country’s electricity production, meaning that these shortages could soon show up for families in the form of higher electric bills. At the same time, a shortage of key inputs used in everything from plastics to electronics is raising production costs — increases that will ultimately be passed to consumers. And the longer high fuel costs persist, the greater the risk that these challenges will drive up costs across the transportation industry, including airlines, trucking, and shipping companies. These costs, too, could be passed to consumers through higher travel fares.
The conflict also exposes a deeper vulnerability in the U.S. economy: our limited ability to expand domestic energy production quickly. The Trump administration and Congress have made meaningful progress in prioritizing energy production, helping stabilize the economy after the 40-year-high inflation of the Biden years. However, lingering roadblocks to producing energy at home threaten to derail that progress. Even before tensions escalated, demand was expected to rise sharply in the coming years while hundreds of energy infrastructure projects remain delayed. That leaves American consumers more exposed to global shocks that drive up energy costs.
The consequences of this conflict go beyond higher prices. They expose broader risks to economic competitiveness, energy stability, and long-term affordability.
The longer the conflict continues — particularly if it escalates further — the greater the economic pressure on American households. That creates a growing tension for policymakers: efforts to stabilize costs at home are increasingly difficult to sustain alongside prolonged geopolitical conflict abroad.
As cost-of-living concerns remain a top issue for American households, policymakers face increasing pressure to reconcile affordability goals with the economic consequences of prolonged conflict.
Addressing these risks also requires reducing long-term vulnerability to global disruptions, particularly by improving the ability to expand domestic energy supply more efficiently.
Because energy costs flow through nearly every part of the economy — from transportation to food production — disruptions in supply quickly translate into higher prices for consumers.
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If these pressures continue to build, today’s price increases may prove to be only the early stages of a broader and more sustained rise in costs. I’m encouraged that the administration seems to be seeking a quick end to the conflict when initial goals are accomplished. Those talks must continue to keep Americans and service members safe.
In the meantime, Congress should address what is squarely in its power (and midterm election interests): policy reforms that set the economy up for longer-term recovery.
Brent Gardner is the chief government affairs officer and senior vice president at Americans for Prosperity.