Economist Paul Krugman cautioned that Americans should anticipate high gasoline prices persisting for several more months, indicating no immediate resolution to the conflict initiated by President Donald Trump regarding Iran. Krugman, a Nobel laureate in Economic Sciences, stated that there is “no relief in sight for people at the gas pump.”
Early Wednesday morning, the price of oil reached $100 a barrel. According to AAA, the national average for gasoline has risen to $4.22 per gallon, while diesel fuel has hit a record high of $5.94 per gallon. These figures represent a significant increase from the previous year, when prices averaged $3.19 for gasoline and $3.70 for diesel.
As the midterm elections approach, the Trump administration has sought to mitigate the impact of high fuel costs, which have negatively affected the president’s approval ratings. Trump has asserted on his social media platform, Truth Social, that oil prices are expected to decline substantially, predicting a drop to $3 per gallon and potentially below $2 per gallon.
Krugman pointed out that while some oil is being rerouted from the Strait of Hormuz and other regional shipping lanes, the ongoing conflict between Russia and Ukraine continues to contribute to elevated fuel prices globally. "In some sense, the world is gradually finding ways to get around the blockade of the Strait of Hormuz. But on the other hand, that is becoming increasingly less relevant," he stated.
He further explained that even if a swift resolution were reached between the United States and Iran, high gasoline and diesel prices would likely persist. "So even if somehow, miraculously, love and peace broke out between Donald Trump and the Iranian regime tomorrow, we will probably still have high prices of gasoline and diesel for a long time to come because it’s not the only source," Krugman said.
Krugman described the global economic situation as "really screwed-up" due to the actions of both Trump and Russian President Vladimir Putin in their respective conflicts. He expressed skepticism regarding predictions of a rapid decrease in fuel prices, stating, "People who are thinking that prices are going to drop off, if Trump thinks they’re going to drop precipitously, there’s absolutely no reason to believe that that’s the case."