Scribble

David Rind

00:00:00

This is One Thing, I'm David Rind, and as fighting in Iran continues, has President Trump already lost the war on gas prices?

David Goldman

00:00:09

This is out of their hands at this point. I think that once you start a war in the Middle East, you don't just get to flip a switch and turn it off. Stick around.

David Rind

00:00:21

Where are you right now?

Martín Izaguirre Salgado

00:00:22

Right now we are in Iraq, at Angkor, waiting for going to the terminal to load our cargo.

David Rind

00:00:33

'This is Martin Izaguirre-Segado. The 26-year-old Spanish seafarer spoke to me on Monday from a giant tanker sitting about 15 miles off the coast of Iraq that is waiting to pick up propane and butane. Martin says it's not uncommon to sit at anchor for up to three weeks before loading cargo. There's only so much room at the docks. But what is unusual about this moment is what could come next.

Martín Izaguirre Salgado

00:00:56

We are supposed to go to Anglades to discharge our cargo but if the situation doesn't change I don't think we will be able to sail through the Strait of Hormuz.

David Rind

00:01:10

He's talking about, of course, the war with Iraq.

Kate Bouldan

00:01:13

'Oil prices have surged now to a four-year high over the disruptions and fears caused by the war with Iran.

Wolf Blitzer

00:01:20

Historical data from Rapidand Energy Group shows the war in the Middle East has caused the biggest oil disruption in history.

David Rind

00:01:29

The threat of Iranian missiles has basically shut down this vital waterway through which 20 million barrels of oil a day, about 20% of the world's supply, normally travel. Operators are just too scared to send tankers through. Too much money and safety is at stake.

Kristi Lou Stout

00:01:44

A senior official with Iran's Revolutionary Guards said the strait is closed, and if anyone tries to pass, Iran will, quote, set those ships ablaze.

David Rind

00:01:59

And Martin says this risk is not hypothetical, not for him anyway.

Martín Izaguirre Salgado

00:02:03

I'm already familiar with this kind of situation because two years ago, in 2024, I was sailing through the Red Sea and we were attacked at that time by the rebels in Yemen. The Houthis? Yes, yes, that's it. We sailed to the north and nothing happened. Then we load in Saudi Arabia and then in our way back to the South. We were shot like four rockets in two different days. Luckily, none of them hit us directly, but they exploded so near that we found little pieces of the rocket of sharpness.

David Rind

00:02:48

Wow, I mean, that's really scary. And yet you still do this kind of work.

Martín Izaguirre Salgado

00:02:55

'Yes, so far I did not think about leaving this kind of work. I cannot see myself working in a normal office or in a salt-based job by the moment.

David Rind

00:03:08

Martin says their crew's doing their best to keep calm amidst a lot of uncertainty, and they're gonna be sure to stock up on plenty of food when they do load up. But the impacts of this oil disruption are not just being felt by those responsible for caring.

Pamela Brown

00:03:24

So right now oil prices are surging and that's pushing gas prices up for consumers.

Matt Egan

00:03:29

The national average before the war started was just $2.98 a gallon. Look where we are now. $3.48 a gallon! That's the highest since the summer of 2024 and this is now a 50 cent increase in the span of just nine days.

David Rind

00:03:45

This sticker shock at American gas stations threatens to exacerbate an affordability crisis that President Donald Trump has had trouble getting his arms around. Remember, before the war, gas prices were one of the few positive metrics he could point to.

President Donald Trump

00:03:59

If you look at energy, I think you're gonna be at $2 a gallon with cars very shortly. $2, it was $4, $5 under the Democrats.

David Rind

00:04:08

Now the numbers he used were often exaggerated or lack context, but Trump did have a point that prices at the pump were under control, not anymore. So as Trump gives mixed messages about when this war will end, what can he actually do to address these rising prices? And what psychological toll can a war in the Middle East take on the average consumer in America? Let's bring in CNN's Dave Goldman. He's a senior reporter with CNN Business. So Dave, just to place this conversation in time, we're talking on Tuesday morning. And this is not the first time a conflict in the Middle East has disrupted oil markets, right? So can we put this in some historical context? Like where does this disruption stack up?

David Goldman

00:04:47

Well, this is the biggest disruption that the industry has ever seen. So we're talking about 20% of the world's oil is stuck in the Strait of Hormuz, which is this really narrow passageway between Oman and Iran. Iran controls the north side of the strait. It's only 21 miles wide. So try getting a ship through that in a war zone.

David Rind

00:05:09

These are massive ships.

David Goldman

00:05:10

These are huge oil tankers. I mean, it's, you know, the expression, you can't turn an oil tanker around really quickly. These are literal oil tankars that are trying to get through. And no one is getting through for a few reasons. One is that insurance companies have said, we are not going to cover you if you go through the strait. And then another reason is that there are mines there. And Iran has said that any tanker that's going through the straight will get. Blown up and that's not a risk that a lot of these companies want to take.

David Rind

00:05:41

Yeah, it's understandable. So can you just explain then in basic terms that these ships are kind of just sitting there, not able to go forward, how does that translate into higher gas prices here in the US?

David Goldman

00:05:51

Well, if you take all of that supply out of the market, if you go back to Econ 101, you have supply and demand are the two forces that change prices for you and me. And so if there is no supply coming into the market and we're still demanding the same amount of gasoline and jet fuel and diesel and all of the other distillates that oil creates, then it means that prices have to rise. And America makes so much oil right now. Right. But it's a global market. And so we sell oil to the global market and we actually import oil into the United States.

David Rind

00:06:30

So it's not like all the oil we're producing, we're all using for just our purposes. It goes elsewhere, so we need more of it from the rest of the world, and that's just much harder.

David Goldman

00:06:41

That's exactly right. So, you know, if you want to sell a barrel of oil on the open market right now, today they're telling you that that is worth 85 bucks and it was 60 bucks just a couple weeks ago.

David Rind

00:06:54

Well, so what can the Trump administration do to alleviate some of this pain? Is there anything?

David Goldman

00:07:00

Yeah, they can stop the bore. I mean, that's really the only thing that's going to get oil back to normal. So there are some levers that they're thinking about pulling.

President Donald Trump

00:07:11

We have so much oil. We have tremendous oil and gas, much more than we need.

David Goldman

00:07:16

One of them is the SPR, so it's the Strategic Petroleum Reserve, and there are millions and millions of barrels of oil that are literally sitting in tanks, and you can put that out into the market and you could say, all right, so here's new supply, and that will change the supply and demand dynamics that we were talking about.

President Donald Trump

00:07:38

'We're also waiving certain oil-related sanctions to reduce prices. So we have sanctions on some countries. We're going to take those sanctions off until this straightens out.

David Goldman

00:07:49

Another lever is that they could start to intervene into the futures market. That gets really messy when you start to mess around with markets. It's not something that's really ever been done before, not something they probably are going to do, but that's a possibility. And then another lever is they could work with international partners to get them to release oil into the market. If you really wanna get into emergency levers, you could say America won't export any oil anymore. We're gonna use all.

David Rind

00:08:21

We're just going to keep it for ourselves.

David Goldman

00:08:23

Exactly, exactly. But, again, those are temporary measures. None of them are actually going to solve the problem, which is that oil is stuck in the Strait of Hormuz and can't get out.

President Donald Trump

00:08:37

The relationship is extraordinary with Venezuela. Smart country. We've taken out 100 million barrels of oil. It's right now.

David Rind

00:08:46

President Trump talks about seizing oil from Iran, like they kind of talked about with Venezuela. Is that feasible?

David Goldman

00:08:54

No. So Venezuela is a totally different country with very different market dynamics. Venezuela actually was one of the largest providers of oil to the United States in the 70s and 80s and 90s until the socialist regime took over and they started to nationalize their industry. And actually, our refineries in America are built for Venezuelan oil. And so it actually would really benefit the United States to bring that Venezuelan oil back online, take the sanctions off and bring it into the United States, that would be a really good thing. Iranian oil is heavily sanctioned. It's not something that we are able to get, just like Venezuelian oil.

David Rind

00:09:40

And the oil that's in the Middle East, is that different, like literally different than the oil we are producing here, and does it have different uses?

David Goldman

00:09:49

Yes, so Middle Eastern oil tends to be heavy sour crude. So that's the real thick sludgy stuff. Now we do get that from other places. We get that Canada. They have the tar sands up there. We get from Venezuela, we get it from Russia and we get from the Middle East. And the reason why we need that oil is because it makes all of the. Thicker distillates. So jet fuel, diesel, asphalt, concrete, things like that you can only get from the thick stuff. In the United States we have light sweet crude and in addition to being delicious it is really good at making gasoline. So that's great and most of what we use oil for is gasoline but when you need the other stuff, which we do, you need to go out to the rest of the market.

David Rind

00:10:39

So based on what you've said, the idea basically is that Americans are going to see higher gas prices until either the war is over or the ships are allowed to go through the Strait of Hormuz and there's not a lot the Trump administration can do in the meantime.

David Goldman

00:10:56

'Well, one of the things that Trump wants to do is to give government-backed insurance to tankers that are in the Strait of Hormuz so that they will have the financial wherewithal to travel through the Straight of Horemuz if they lost their insurance. But that only goes so far, right? If you're in danger of getting blown up, then it doesn't matter how much insurance you have in your ship. So the Trump administration also said that it'll have naval escorts take boats through the Strait of Hormuz. Well, right now the Navy's a little bit busy. So one of the things that my colleagues, Phil Mattingly and Zach Cohen have reported is that the aim of the Navy is going to be to take out the capabilities for Iran to attack the ships on the coast that they're firing from. Like kind of clear the area. Exactly, and they need to do a mine sweep so that ships don't accidentally trip one of those and blow up.

President Donald Trump

00:11:54

'And we have the greatest mine-sweeping ability. We have the great ships and all of the — we know exactly where they're placed. We'll get them out of there very fast.

David Goldman

00:12:03

That's not gonna happen tomorrow. So yes, it is possible that those two things, the insurance and the naval escorts, will convince ships to start flowing through the Strait of Hormuz. But remember, there used to be, on a typical day, 60 to 70 oil tankers that would go through the strait. Now we're seeing zero to two. So getting back to 60 to 75, oil analysts are telling us that that could take one to three months. So we could be dealing with this for quite some time.

David Rind

00:12:33

We got to step away briefly, Dave, and I will be back in a sec. And when we do, we're going to talk about the number we should all be looking for at the pump, whether you have a car or not stick around. It goes without saying that it sucks to see higher gas prices out and about as a car owner myself, I feel this. What kind of psychological impact does that have on consumers? Like what are the ripple effects even beyond just gas if people are driving around and see the numbers go up and up and up.

David Goldman

00:13:07

So, we already have an affordability problem in the United States, and we've seen without high gas prices, people are really, really angry at the administration for the state of the economy. Now you're going to start to see high gas price plastered all over town, and that makes a huge difference because people know that price, it's something that they feel every time they pump their gas and that starts to weigh on the other stuff that they can buy. So if you're spending more money on gas, it means that you might be spending less money on clothes or food or rent or things like that that you need to spend and that gives some really, really difficult choices to make.

David Rind

00:13:54

Yeah, because the choice with gas or no gas is literally going about your life. So it's not likely that people will give that up readily.

David Goldman

00:14:02

You need it to get to work. But it's not just gas prices, it's diesel prices as well. So, you know, you and I don't pay for diesel unless you have a diesel car, but you have trucks that use diesel and they ship all of the stuff that we get. Whether or not you buy it online and get it delivered to your house, they deliver it to the store. They deliver your food, they deliver everything. And so that ends up getting factored into the prices that we pay as well because companies, retailers need to start raising their prices.

David Rind

00:14:33

Is that why we're starting to hear that, you know, a war like this could cause a recession just because of all the various different industries that the oil touches and that, you know kind of just keeps going and going the longer this goes.

David Goldman

00:14:46

Right. So, there's a few factors. One is the prices that we pay. So almost 70% of the US economy is made up of consumer spending. So if that starts to fall, that's the biggest input into GDP, gross domestic product, which is the broadest measure of our economy. So that means that that number starts to fall. Already, economists are saying that what we've seen could hurt GDP by about half a percentage point, but if you start to see this last a long time, those numbers keep coming down. But then also businesses get anxious. And if businesses get anxious, it means that they don't hire. And when businesses don't hire, then they start to fire. And then if you start to have job losses, that has an effect where people don't have as much money to spend on the goods. And then this can really become a very, very ugly situation pretty quickly. Right, just snowballs.

David Rind

00:15:45

'And obviously this is a midterm year, so less than ideal timing for Trump and the Republican Party, a group that has struggled to empathize with Americans who say life is really unfordable. But Trump continues to say this will be short-term pain for long-term gain. He's called it a glitch even at some points. Is there any evidence that Americans will buy that messaging?

David Goldman

00:16:06

'Not for a long time. So, I mean, right now, gas prices are at 355-ish. So, you know, if those go to four, that's a psychological barrier for a lot of people where they actually start to change their behavior. But if we just pull... Out of the war and we say we're done and Trump tries to sell this as, well, we got regime change done, we've got a new guy in, and we feel good about where we are. That might be a tough sell if people don't think that it was worth it, but if people think that was worth in gas is only in the 350 to 370 range, we might be able to withstand the increase, especially if gas prices start to come down pretty soon.

President Donald Trump

00:16:52

This was an excursion that a lot of people wouldn't have done. I knew oil prices would go up if I did this, and they've gone up probably less than I thought they'd go up. But I don't think anybody thought we were going to be this quickly successful.

David Rind

00:17:05

And it seemed telling that Trump the other day was saying that he expected the oil prices to go up. He even said he expected them to go more. So it's not like they weren't aware that this could have happened, but like the whole psychological angle of it is really something that they don't have a ton of control over at this point.

David Goldman

00:17:25

That's right. I mean, this is out of their hands at this point. I think that once you start a war in the Middle East, you don't just get to flip a switch and turn it off, right? So now there are all kinds of issues that we have to deal with, including getting that straight of her moves turned back on. And that's not something that just saying, we declare victory, we're done. That's not something that you can just do. So.

David Rind

00:17:49

Because it's also Iran has a lot to say about that if they want to fire people they can

David Goldman

00:17:53

That's right, or if Israel wants to continue to, you know, they've already said that they're gonna try to, you know continue these attacks, so if they continue those attacks without the United States then that continues war in the region.

David Rind

00:18:05

Well, so on Monday afternoon, Trump came out and said that the war was basically done. He told that to another reporter, but then came out at a press conference and gave some more conflicting signals. But after he gave that initial statement, we saw stocks shoot up, oil kind of came down. Can he talk his way out of this just by kind of, you know, messaging it the right way.

David Goldman

00:18:26

No, so the only thing that will get oil prices back down to where they were at around $60 a barrel is for the Strait of Hormuz to reopen. And so the United States can say, we're done with this war, we are getting out, but that doesn't open the strait. And so we've already seen an anticipation of that happening. Oil prices, which briefly touched almost $120 a barrel, come all the way down under $90 a barrel. That's a huge drop.

David Rind

00:18:58

Just on the suggestion that something might happen...

David Goldman

00:19:01

'Exactly, which suggests that oil prices were probably over-inflated and that they shouldn't have ever really been $120 a barrel. But notice that they didn't come all the way back down to $60. So they already are pricing in a premium because they understand that this isn't a conflict that's going to end tomorrow. It might not even be a conflict that will end next week, which is Trump's timeline. This could be with us for quite some time, even if the United States doesn't have a lot of active involvement in the war.

David Rind

00:19:34

Well, Dave, thanks for the perspective. I appreciate it. All right, that's all for us today. Thank you as always for listening. You're the reason we keep doing this. Head over to cnn.com for the very latest on the war and what's going on with gas prices. And we'll be back here on Sunday with another episode. Talk to you later.

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