US-Iran War: How Rising Petrol Prices Could Put a Bigger Hole In Your Pocket

Petrol has become more expensive in 145 countries since the United States and Israel began attacks on Iran on February 28, meaning drivers in much of the world are now paying more for the same amount of fuel.

The increases have also raised concerns beyond transport. Higher oil and gas costs can increase the expense of moving goods, producing fertilisers and making everyday products, putting further pressure on food prices and household spending. The figures show that higher fuel costs are affecting consumers well beyond the countries directly involved in the conflict.

GlobalPetrolPrices, which tracks fuel prices in 170 countries and territories, recorded petrol price increases in 145 countries between February 23 and August 17. In 25 other countries, prices either remained unchanged or fell by single digits. Most of those countries are oil producers with heavily subsidised fuel, according to Al Jazeera.

Myanmar saw the largest increase, with the price of 95-octane petrol rising 56 per cent from $0.77 per litre on February 23 to $1.20 on August 17. Bhutan followed with a 55 per cent increase, while prices rose 51 per cent in Cuba, 50 per cent in the United Arab Emirates and 48 per cent in Nigeria.

What higher petrol prices mean for drivers

The change is particularly clear when looking at how much distance a fixed amount of money can buy.

In the United States, regular petrol cost an average of $2.94 per gallon (3.78 litres) before the war. The price has since risen to $4.09 per gallon, a 39 per cent increase, according to AAA Fuel Prices, which tracks retail fuel prices for the American Automobile Association.

For a family sedan, $50 of petrol previously provided enough fuel to travel about 718 km (446 miles). At the current average price, the same $50 buys enough fuel for roughly 536 km (333 miles).

That means drivers get about 183 km less travel from the same amount of money — a 25 per cent reduction in driving distance.

The effect differs depending on local fuel prices. Al Jazeera reported that its interactive tool allows users to select their country, car and budget to see how far their money can take them. Those using the tool in the US can also choose a state and fuel grade.

How oil prices reach the cost of food

The cost of filling a vehicle is only one part of the wider impact of more expensive oil.

Fuel and energy are used throughout the food supply chain. Farmers rely on fertilisers to increase crop yields, while trucks, ships and other forms of transport are needed to move food from producers to consumers. Higher oil prices can therefore increase both production and transport costs.

“The lifeblood of the global economy is transport,” economist David McWilliams told Al Jazeera. “It’s getting stuff from A to B – it’s a logistics problem, a supply chain problem and ultimately transportation is the energy of the global economy.”

Shipping costs are also affected by oil prices, adding another potential expense to the movement of food and other goods.

The consequences can be more serious in lower-income countries, where people spend a much larger share of their earnings on food and many countries import grain and fertiliser. According to Al Jazeera, a rise in oil prices in such economies can quickly feed into food costs and, in some cases, contribute to food shortages.

Oil is also part of thousands of everyday products

Oil is used as a raw material in thousands of everyday products, while natural gas is also important to food production through its use in fertilisers.

Crude oil is used to make plastics found in water bottles, food packaging, phone casings and medical syringes.

Oil-derived materials are also used to produce synthetic fabrics such as polyester, nylon and acrylic. These materials are used in products ranging from sportswear to carpets.

The cosmetics industry also uses petroleum-derived ingredients. Petroleum jelly, including Vaseline, as well as lipsticks and concealers are among the products made using oil-derived ingredients.

Many household products also rely on petroleum-derived materials, including laundry detergents, dishwashing liquids and paints.

Natural gas has an important role in food production because it is used to make fertilisers. These fertilisers help improve crop yields and enable food production to keep pace with demand.

What the Iran war means for petrol prices in India

For Indian consumers, the rise in global oil prices has also put pressure on domestic petrol costs. India imports most of its crude oil, making local fuel prices sensitive to movements in international crude markets. However, petrol prices are also shaped by taxes, international crude prices and the pricing decisions of oil marketing companies. For drivers, sustained higher oil prices can translate into higher fuel bills and increased transport costs.