On any given day, Moran Transportation Corp.’s fleet of trucks covers some 34,000 miles.
Though the 46-year-old Elk Grove Village trucking company prides itself on being more efficient than ever, it still takes a whole lot of diesel to see a day’s work through.
Those 34,000 miles start to add up, especially when fuel prices surge — let alone during an unprecedented disruption to the global energy market.
For weeks now, the war that the U.S. and Israel launched against Iran in late February has destabilized worldwide energy production, culminating in what industry leaders are saying is the largest disruption to the global oil market in history. And while the conflict lies halfway around the planet, Illinoisans are feeling the weight of the supply shock.
Since the start of the war, the average cost of gas has gone up more than 25% in Chicago. That stat, which reflects the change in prices from February to March, is the single biggest month-over-month increase on record for the city, according to a Tribune analysis of data from the U.S. Energy Information Administration…
What’s heightening the crisis is that stopgaps typically used to offset supply shocks have been rendered moot. A bulk of the world’s oil reserves are held by the countries around the Persian Gulf and usually, they can bring extra production online to keep costs steady amid emergencies, according to Sam Ori, executive director of both the Institute for Climate and Sustainable Growth and the Energy Policy Institute at the University of Chicago.
But with the strait closed, reserves are bottled up. Some oil-producing nations in the Middle East have also halted production because they can’t ship fuel out of the Gulf and their storage tanks are full.
The combination has made for “an unprecedented heart attack for the global oil market,” Ori said.
Though the U.S. is a major oil producer, being part of the global oil market means that when there’s a disruption, the effect is felt here at home, Ori said. The most immediate way that’s seen is the price at the pump. This week, gas prices in Chicago averaged $4.23 per gallon of regular — about 11 cents higher than the national average.
“Gasoline expenditures are the largest energy expenditure for your typical household in the United States … (and) it’s not like when gasoline prices go up you can switch to something else,” Ori said. “So that means household budgets will come under additional strains.”
At a BP gas station in Humboldt Park on Thursday afternoon, where the cost for regular fuel was $4.49 per gallon, Margaret Barnes called the price hike “ridiculous.” The lifelong Chicagoan said she’s had to pick up extra shifts at her hospital job to afford gas and has had to be more cognizant about how she’s spreading her paycheck since the Iran war started.
“I don’t know what’s going on, but it’s a mess,” she said. “I’ll be glad when they resolve whatever they need to do, so life can get back to normal again.”
It will be some time before the market starts to stabilize, even if tensions abate soon. There’s been enough damage and disruption that there’s going to be a lasting impact measured in months, Ori said. Just how lasting it will be will depend on the coming days.
Tuesday night, the U.S., Israel and Iran reached a tentative two-week ceasefire. But that deal hung in the balance Thursday after Israel pounded Lebanon with airstrikes and Iran maintained its grip on the Strait of Hormuz.
Speaking Tuesday as news of the fragile ceasefire started to circulate, Ori said, “We’re at the moment of truth here.”
“If the strait doesn’t reopen tonight,” he continued, “and this keeps going into April … I think you’re going to start to see oil prices that go, you know, really, really, really, really high.”