West Asia war starts pinching US; gas prices, transport costs surge
The war against Iran has started to impact Americans, with Amazon announcing a fuel surcharge for its e-commerce deliveries and some airlines hiking fees for checked-in baggage to offset higher fuel costs.
The average price of petrol in the US has increased to USD 4.09 a gallon on Friday, up more than one dollar from just before the war and the highest level since August 2022. The cost of diesel has risen sharply from USD 3.64 per gallon a year ago to USD 5.53 per gallon on Friday, according to data maintained by the American Automobile Association (AAA). Diesel is widely used in farming, construction and transportation, besides other industries.
E-commerce giant Amazon also said that, beginning April 17, it plans to add a 3.5 per cent fuel surcharge on third-party sellers.
The US Postal Service on Wednesday said it is seeking to impose a temporary 8 per cent fuel surcharge for package and express mail deliveries to deal with rising transportation costs.
If approved by the Postal Regulatory Commission, the surcharge would take effect April 26 and remain in place until January 17, 2027, the Postal Service said in a notice on its website. If the war against Iran stretches longer, it will also lead to supply chain disruptions in the US.
“I don’t think the US will avoid it. These are global markets,” Rachel Ziemba, a New York-based analyst who advises corporations on geopolitical risk, was quoted by The Washington Post as saying. “Experts, even a week ago, were worried. Now they are more worried,” she said.
“If transportation costs start rising, it’s going to bleed through in other prices,” Austan Goolsbee, president of the Federal Reserve Bank of Chicago, was quoted as saying by CBS.
“So I think it’s in the near term, but not immediate, that you would start to see that weighing down of the consumer — they would just get sticker shock. People were already highly concerned about affordability and the cost of living, and this would just be piling onto it,” he said. Blocking the Hormuz Strait has already cost the global economy hundreds of millions of barrels of oil, with the effects felt on a rolling basis corresponding to travel time from the West Asia, The Washington Post reported, quoting from a recent client note from JPMorgan’s commodities specialists.
