The factoid thrown around is that roughly 20% of the world’s oil supply travels through the Strait of Hormuz. Since it closed, my local gas prices in one area of the US midwest have gone from $2.60 to now $4.10 presumably as reserves have been used up.
I could understand a 20~30% increase in price to correlate with the reduction in supply, but what are the economic factors that lead to what feels like such a disproportionate increase?
Its a commodity that only sum can reduce usage of. People who commute to work by car and don’t have an alternative can’t stop buying much less gas. Maybe they can get a carpool thing going but that is not easy at all. So like countries reducing the work week by a day or make it mandatory wfh will allow many people to reduce 20% but the trucking won’t be able to reduce. so people reduce only when the economics force them to. Factories might shutdown if the cost of fuel is over what they can seel for and such.