US gasoline prices have reached $3.88 per gallon as the Iran war disrupts oil supplies and pushes prices higher. American consumers are directly feeling the consequences of Middle East conflict.
The Price Impact
Three dollars and eighty-eight cents per gallon is painful but not yet catastrophic for most Americans. But if prices continue rising to $4, $4.50, or $5 per gallon, the impact on consumer spending becomes severe.
Higher gas prices reduce discretionary spending. Families cut back on dining, entertainment, and retail spending. Economic growth slows. Business investment declines. The entire economy contracts.
The Political Consequence
Gas prices are viscerally felt by every American who drives. When prices spike, voters blame whoever is president. Trump will face political pressure as prices rise. His support for the Iran war will become politically vulnerable if gas prices double.
Trump might calculate that the electoral risk of high gas prices outweighs the strategic benefits of confronting Iran. Gas prices are poison for incumbent presidents.
The Consumer Wallet
For a family driving 12,000 miles per year in a vehicle averaging 25 miles per gallon, the difference between $2 gas and $4 gas is about $960 per year. Multiply that across the economy, and the wealth transfer from consumers to energy producers becomes massive.
This is economic pain that ordinary Americans experience constantly, making it politically consequential.