Rising oil prices linked to the conflict are already hitting wallets in San Diego, with gas costs climbing and everyday expenses under pressure.
SAN DIEGO — Escalating conflict in the Middle East is beginning to hit home for San Diegans, from Wall Street losses to rising prices at the pump.
The Dow Jones Industrial Average dropped more than 400 points on Tuesday as investors reacted to growing uncertainty overseas. Economists say markets typically respond quickly to geopolitical instability.
“Today the stock market is not liking it,” said Dr. Alan Gin, an economics professor at the University of San Diego. “Yesterday was not a big move, but prices are down considerably here today.”
Gin says the most immediate economic impact has been on oil. Since the conflict began, crude oil prices have increased by about $10 per barrel.
“If you look at the normal relationship between the price of oil and the price of gasoline, that could translate into about a 25-cent-a-gallon increase in the price of gasoline,” Gin said.
San Diego drivers are already seeing prices rise. According to AAA, the average price of a gallon of regular gasoline in San Diego County rose nearly four cents overnight to $4.73, the highest price since December. Nationally, gas prices jumped 11 cents.
A key concern in global oil markets is the Strait of Hormuz, a narrow waterway next to Iran through which roughly 20% of the world’s oil supply is transported.
Crude oil is a primary ingredient in gasoline, jet fuel and diesel. Because of ongoing attacks and the potential for retaliation, some shipping companies are reassessing routes amid safety concerns.
Gin says that disruption is already affecting supply.
“The tankers are having trouble getting insurance going through there, so the flow of oil has been curtailed,” he said.
Higher oil prices can have broader consequences beyond the gas pump. Increased diesel costs raise shipping expenses, which can push up the price of goods and contribute to inflation.
For San Diego residents like Trevor Arnes, who says he lives paycheck to paycheck, even small increases in gas prices make a difference.
“I think it just makes things tighter for a lot of people, you know, as high as it is already,” Arnes said. “I gotta pay for gas, I gotta get to work so I can’t go out. It takes away from just the livelihood of being able to live life here in San Diego.”
Economists say the key question now is how long the conflict will last. If tensions ease, markets and oil prices could stabilize. But if the conflict drags on, San Diegans may continue to feel the ripple effects.
