Four years ago we made an episode about how the president has very limited powers when it comes to lowering the price of gas. Turns out, we hadn't considered every possibility.
Today, we talk about how a president can make gasoline more expensive, by waging conflict in the middle east. Our guest is Robert Rapier, chemical engineer, investment writer, and energy sector expert. He came back on the show to tell us about the logistics of Iran closing the Strait of Hormuz, and whether there are any ways out of this.
Click here for our other episode on the price of gas, and read Robert's article here.
Transcript
Speaker 1: We're down lower than we've been in seven years. And gasoline prices and oil prices, not just the three states that I talk about with 199 a gallon. How would you like to have 199 in.
Speaker 2: The U.S. and Israel have launched strikes and a major military operation targeting Iran.
Speaker 3: Good evening. We begin tonight with the escalating battle over one of the world's most vital shipping channels.
Speaker 4: Not everybody's planning to vote for Republicans in the midterms who supported Trump. Let's take a listen [00:00:30] to one more woman who we spoke with. And you voted for him. How many times?
Speaker 5: Three times. That was my bad. Apparently, I'm an idiot.
Nick Capodice: You're listening to Civics 101. I'm Nick Capodice. I'm Hannah McCarthy, and today we have a correction. Maybe more like an update. Four years ago, I made an episode where I implied that the president has little to no effect on the price of gas. Turns out I was wrong. Stick [00:01:00] around.
Hannah McCarthy: All right, Nick, tell me how you were wrong about the president and gas prices.
Nick Capodice: Well, it's less of a wrong. More of a yes. And Hanna, there is, by the way, a link to our episode, the president and the price of gasoline down there in the show notes. But it's not inaccurate. That episode's good. It stands. It's legit. I just didn't consider every possibility. One possibility in particular. But to start, I want [00:01:30] to just quickly remind everyone what a president can do to affect the price we pay at the pump.
Robert Rapier: So a president has relatively few handles in the short term to deal with gasoline prices.
Hannah McCarthy: Wait, is that the same guy you had on in the episode The President and the Price of Gas?
Nick Capodice: It is. And he's saying pretty much the same thing. In fact, Hanna, I have the tape of what he said four years ago.
Robert Rapier: There are very few handles that a president has to influence gas prices in the short term.
Hannah McCarthy: So, so far nothing's [00:02:00] changed so far.
Nick Capodice: But I wanted to come back to this topic, Hannah, because I filled my tank this week and it was a lot more money than it was the week before. And of course, I'd been reading about what's going on in Iran. And I said to myself, can we really not blame the president for the price of gas prices? Really? So I called him up and had a little chat. This is, by the way, Robert Rapier.
Robert Rapier: My name is Robert Rapier. I'm a chemical engineer. I've spent a career in the energy industry and [00:02:30] I write and cover the energy industry.
Nick Capodice: So quickest recap ever. Here are the things that a president can do to reduce the price of gasoline.
Robert Rapier: One of those is the Strategic Petroleum Reserve. So when oil prices are spiking, we have a large strategic petroleum reserve that presidents can use to release oil and help put more supply on the market and bring prices down. That's one of the handles the president has. Um, the other is, you know, they could hypothetically waive [00:03:00] taxes in the short period to reduce prices.
Nick Capodice: A word more on those taxes. Federal taxes make up about $0.18 per gallon of gas that you buy, and state taxes vary. They vary a lot from $0.09 a gallon in Alaska to $0.70 a gallon in California.
Hannah McCarthy: And I remember that the main contributor to gas prices is the price of crude oil per barrel.
Nick Capodice: That's right. As we are saying these words. Hannah March 19th, 2026. The price of oil is $97 [00:03:30] a barrel, up from $57 a barrel at the beginning of 2026. And you got to be careful, Hannah, because when you start your day opening up a tab with the crude oil price tracker, it can become a bit of a habit.
Hannah McCarthy: And how close exactly are those two things tied the price of crude oil and the price of gasoline.
Robert Rapier: It's generally correlated above 90%. So generally oil prices rise. Gas prices rise. Now there is a refining system between oil [00:04:00] and gasoline, and sometimes that refining system can impact things in a way that oil prices are steady, but gas prices are rising or vice versa. Um, just depends on what's going in the refinery. Um, you know, longer term, it's very difficult, um, for president have a big impact, but you know, pro oil policies can help. Um, you know, taxation, there are a lot, lot more handles in the long run, but short term, you know, the options are pretty limited. There [00:04:30] is one thing a president could do to make prices skyrocket and that is conflict in the Middle East.
Speaker 10: Good afternoon everyone. We are interrupting the game for just a moment here because there is major breaking news at this hour. Abc news has just learned that Iran's supreme leader, the Ayatollah Ali Khamenei, is believed to have been killed in the attack in Iran. President Trump just moments ago confirming the news in a social media post killed in that attack led by U.S. and Israeli.
Hannah McCarthy: How much of the world's oil comes [00:05:00] out of the Middle East?
Nick Capodice: That is a tricky question. It's about 30%. North America is the number one region producing 31%. And I say it's tricky because oil from different places is different oil. It costs more or less to extract, to refine, etc..
Hannah McCarthy: And when did we start? Depending on oil production in the Middle East?
Nick Capodice: That started in a big way in the 1950s. And by the 1970s, the world market was completely dependent on oil [00:05:30] from the Middle East, which is why conflict in the Middle East has an immediate effect on the price of crude and therefore the price of gas.
Robert Rapier: You know, when we talk about tensions in the Middle East, we're talking about a few scenarios that could unfold that could dramatically increase the price of oil. And I call these the nuclear scenarios.
Hannah McCarthy: The nuclear scenarios.
Nick Capodice: Yeah. Doesn't mince words that Robert Rapier. So here they are.
Robert Rapier: One [00:06:00] nuclear scenario is that Saudi Arabia, the region's largest producer, gets dragged into a full blown war and their oil producing facilities are exporting. Facilities are damaged. That's a nuclear scenario. Um, nuclear scenario is 2 or 3 of the large producers in the area get dragged into a conflict. But the other nuclear scenario is the one that has just happened, and that is Iran closes down the Strait of Hormuz.
Speaker 11: Iran flexing its muscle, launching projectiles and planting mines there, exerting control over this key [00:06:30] route, targeting ships that have passed through the narrow waterway. Iran vows to strike any ship linked to the U.S., Israel or their allies that passes through here.
Robert Rapier: That's actually worse than the others, because 20 million barrels a day and another 2 million barrel oil equivalent of of liquid natural gas pass through that strait every day under normal circumstances. That's 20% of the world's oil supply.
Nick Capodice: On February 28th, 2026, the United States and [00:07:00] Israel conducted a surprise attack on Iran. Iran's Health Ministry reports that so far, about 1500 Iranian civilians have been killed, including 165 at a strike on a school and 18,500 people have been wounded. Now, I do not have an accurate number of Iranian military killed in battle. The United States and Israel says it's about 6000 Iranian soldiers. And the United States has reported the loss of 13 [00:07:30] US service members in the conflict so far.
Hannah McCarthy: And what is the stated reason for this attack?
Speaker 12: If you had to explain in 10s, why did we go to war now?
Speaker 13: It's a very good question. And the truth is, we don't know the answer, right? They have given us multiple versions of that story all week.
Nick Capodice: So collecting Donald Trump's Truth Social posts, along with statements by Secretary of War Pete Hegseth. Secretary of State Marco Rubio and US ambassador [00:08:00] to the UN Mike waltz, in the first week of the war. I read nine different, sometimes conflicting, explanations from preventing nuclear weapons to inciting a regime change, to preempting Iran, attacking us, to destroying Iran's missile capabilities, to securing resources. As GOP Senator Lindsey Graham said when he went on Fox News.
Speaker 14: When this regime goes down, we're going to have a new Mideast. We're going to make a ton [00:08:30] of money.
Hannah McCarthy: So Robert said that 20 million barrels of oil go through the Strait of Hormuz. And this isn't a large body of water, right? It's relatively small.
Nick Capodice: It's not big. There's no way to sneak through it. It's, you know, it's 100 miles long, 20 miles wide. Iran can lay mines. They can fire on any tankers they see with ease.
Hannah McCarthy: Is there no other route these ships can take?
Robert Rapier: No. So if you [00:09:00] if you look at the Strait of Hormuz to the north, I mean, it's it's a dead end. You know, it goes up to Kuwait and it's able to pick up oil and natural gas from Qatar and different places. But there's no other way out. There are you know, Saudi Arabia has a pipeline that goes across. There's a pipeline that goes to the north, but those are all very limited. I mean, 20 million barrels a day is a staggering amount of oil to move. Um, you know, no pipeline is moving that amount. So those ships constant traffic. And if you, if [00:09:30] you look, you know, there's a site out there, Marine Traffic.com if you go look, you can see there is absolutely no ship traffic going through the Strait of Hormuz and it's normally just constant. Um, if you use that site and you pop over to the Red sea, you can just see red, red lines of ships going all up and down that, going up to the Suez Canal and going through, but going through the Strait of Hormuz. There's absolutely nothing going on right now. And it's usually very, very busy traffic through there. People talk about it being one of the most important choke [00:10:00] points. It is the most important choke point for energy in the world.
Hannah McCarthy: Did you go to Marine Traffic.com?
Nick Capodice: I did and added yet another daily tab that I can't stop checking. But again, no way out, no way around. It is entirely in Iran's hands.
Robert Rapier: No other country ever in history has had the ability to control that much of the world's oil supply ever. So Iran with, you know, I mean, this is why this is why presidents have been hesitant to attack Iran. [00:10:30]
Speaker 15: I did criticize the president because of our undercutting of what was a stalwart ally, the Shah of Iran.
Speaker 16: We want better relations with Iran. I remember when we had good relations. We like the Iranian people.
Speaker 17: Well, I could have been reelected if I had taken military action against Iran, it would have shown that I was strong and resolute and manly and so forth. But I think if I could have wiped ran off the map with the weapons that we had. But in the process, a lot of innocent people would have been killed, probably [00:11:00] including our hostages.
Robert Rapier: Because while it is a nuclear option for them, it is an option. And it's going to. I mean, everybody's going to suffer, not just the United States. Everybody in the world who uses, uh, fuel is going to suffer because, uh, we just took offline 20% of the world's supplies. And so now we are scrambling to fill those gaps.
Nick Capodice: And it is not just oil. Hannah. As important as oil is, it's not the be all end all here. Other ships [00:11:30] carrying a lot of other stuff go through there as well.
Robert Rapier: And it's also, you know, critical supply route for fertilizer. Um, for, you know, trade in general, a lot of container ships go through there. And when you think about what's being disrupted, those ships are all scheduled, you know, they're supposed to be somewhere else. Now you've got a lot of ships that are trapped inside, uh, you know, to the north, and they can't get out. They're stuck. Um, so there's going to be a disruption of trade here. That's going to [00:12:00] be, I think, reminiscent of Covid when we saw, you know, supplies get disrupted, supply chains get disrupted. I think we're going to see that right now. We're going to see, you know, some some problems. I think we've just scratched the surface of what we could see. I mean, it largely depends on Iran and how much they want to dig in here, but they could bring the global economy to its knees.
Hannah McCarthy: That is a grim picture. Does Robert have any ideas in terms of what we can do, or rather what America [00:12:30] can do?
Nick Capodice: He's got a couple and we're going to get to that right after a quick break. We're back. This is Civics 101. Today we are talking about the way a president can affect the price of gas, namely by attacking Iran.
Hannah McCarthy: So we have a gap right now 20% of the world's oil is stuck in the Persian Gulf, not to mention myriad other container ships. What can the world do [00:13:00] to make up for all of that missing oil?
Robert Rapier: And the math says you could maybe best case, short term, fill about half that gap. Um, you could you could maybe come up with 10 million barrels. And that's draining strategic petroleum reserves from Europe and from, you know, G7 countries and from the United States. So that only gives you a boost for, you know, a month or six weeks, and then you're back to, you know, if the strait is still closed, then you're then you're in some real pain. Um, then that supply [00:13:30] goes off. You know, there are some other options. Saudi has an underutilized crude oil line going west to the to the Red sea. And they have proposed to to push more crude in that direction. Iran has let some ships go through that are going to China. So so that helps a little bit. And the US has, uh, offered a waiver to Russia to allow them to sell oil to India, which ironically helps Russia continue to fight against, um, against [00:14:00] Ukraine. It gives them cash that they need. So, you know, it's a win win for Russia. When you talk about who wins out of this. I mean, Russia comes out of this as one of the biggest winners. They undoubtedly would like to see this go on as long as possible and see oil prices hundred $150. I mean that's that's just gold for Russia.
Hannah McCarthy: What is the highest oil barrel prices have ever been?
Nick Capodice: There was a spike in 2008 that led oil to be $147 a barrel, but that really was a spike. By the end [00:14:30] of the year, it was back down to $40 a barrel.
Hannah McCarthy: Has anyone suggested how high it could go as a result of this conflict?
Nick Capodice: Lots of folks have speculated. Last week, a market analyst on NBC said, quote, I wouldn't be surprised if oil went to 200 bucks or even 250, because commodity prices go parabolic when there's a shortage of supply.
Hannah McCarthy: So what can we do.
Nick Capodice: In the short term? I don't know if there's anything we can do because this was a complete surprise and nobody [00:15:00] had planned for it.
Robert Rapier: In the long term. If you said, you know, over the next five years, we're going to be missing 20 million barrels of oil a day, there are things that producers would do. They'd go out and they'd make investments and so forth. We don't really know how high oil prices could go, because the question I ask people is, how much would you pay for gasoline before you stop buying gasoline? And most people go, well, I don't have a choice. I have to drive back and forth to work. Um, right. So if if you're paying $4 now [00:15:30] and gasoline is $10, would you stop driving? And people go, well, I couldn't, I mean, I couldn't afford that, but I also couldn't stop driving.
Nick Capodice: But after a long time of $10 a gallon for gas, people are gonna change. People will use public transit. They'll use carpools. Eventually consumption will lessen.
Robert Rapier: But, you know, until a lot of consumption falls off. If Iran digs in their heels here, we're in for a [00:16:00] very rough time. And I would expect us to go into recession if if oil prices go above $100 and stay there, which right now, from my view, they they should be above $100, given that Iran is looks like they're digging in and, you know, there's just there's just not enough supply right now. I mean, the world is vastly underproducing what, what the world is demanding right now because it's just not moving through there. It's, uh, this is huge. Yeah, I, I, [00:16:30] I got up and I said, I, I think this is a huge, huge miscalculation. And, um, you know, we'll, we'll see how it goes.
Hannah McCarthy: That leaves me thinking about the very last thing a president can do to affect gas prices. And look, I know the Constitution says Congress declares war, not the president. We have not declared war since World War Two. By the way, but could this lead to a larger war?
Nick Capodice: Robert says that is definitely a possibility. [00:17:00]
Robert Rapier: We'll look back. I think this will be one for the history books. We'll look back and we'll go, this was a crisis that, uh, you know, this is why people in the past have been very, very hesitant. As much as people view Iran as a problem to be to be dealt with. The reason people haven't dealt with them is what we're experiencing right now, because they can shut down that Strait of Hormuz. And why is that? Because it cuts deeply into their territory right there at a very [00:17:30] narrow point. And they can surround it on three sides. And they they they can. I mean, you have to come very close to Iran getting a ship through there. And they can they can just stop traffic, they can bombard things coming through there. And that's going to put immense pressure, I think, on President Trump to put ground troops in there. I think if if you ask me what's going to happen, I would predict that we're going to have to put ground troops in there. Um, if if Iran refuses to open it up, I think that's going to be where the pressure is. Not that I [00:18:00] want to see that. I absolutely don't want to see it, but I think that's the pressure that's going to going to come.
Nick Capodice: Well that's the president and the price of gas part two not a replay, a redux. Rebecca was like, don't let people think it's the same episode because it sure isn't isn't the same anything. This episode was made by me Nick Capodice with Hannah McCarthy. As always, thank you Hannah, our producers, Marina Henke and our executive producer, the aforementioned Rebecca [00:18:30] LaVoy. Music in this episode from blue Dot sessions, Epidemic Sound and the beautiful Chris Zabriskie Civics 101 is a production of NPR New Hampshire Public Radio.