Local Economy Feels Pinch From Rising Oil Prices

The United States war in Iran has impacts on Central Minnesota.  St. Cloud State University Economic Professor King Banaian joined me on WJON to discuss those impacts.  He says gas prices going up is the one that is most noticeable but not the only impacted product.  Banaian believes we are on a path to see gas prices exceed $4 a gallon within the next month.

World Market

Banaian says the United States isn't dependent on foreign oil but we live in a world market.  He explains the world has less oil available right now with very few oil tankers passing through the Strait or Hormuz on a daily basis compared to the activity prior to the war.  Banaian believes some countries may run out of oil or will start rationing it due to the cost and scarcity.  He says countries that are vulnerable to run out of oil include southeast Asian countries and Pakistan.

Fertilizer Going Up

The price of oil in the United States continues to go up due to less oil being available on the world stage.  He says this will also affect the price of fertilizer and helium.  Banaian  expects the cost of clothing to go up if southeast Asian countries see slowed production due to a lack of oil for transportation.  He believes some of the cost increases will be delayed but others will be felt immediately like the cost of fertilizer this spring.

Travel Impact

If the war lingers into the summer months, Banaian believes it will have an impact on travel.  He expects less flights oversees and longer vacations domestically could be impacted.  Banaian doesn't believe summer road trips will be bothered by the gas price increase.

If you'd like to listen to my conversation with King Banaian, click below.