Pocketbook pressures are likely to increase noticeably throughout the Inland Empire and elsewhere as the effects of steadily rising energy prices stemming from the Middle East war start to weigh on consumer goods and services, according to published reports.
The U.S. Bureau of Labor Statistics will not publish the Inland Empire’s bimonthly regional Consumer Price Index, which tracks a broad range of costs, until April 10, but national trends already point to elevated inflation.
The Federal Reserve Bank of Cleveland’s “Inflation Nowcasting” metric for personal consumption expenditures showed a nearly half-percentage-point rise in recent weeks. That follows publication of the nationwide CPI released by the BLS Wednesday, showing a .3% growth in consumer costs for February.
Since the reported joint U.S.-Israel military operation that sparked fighting with Iran on Feb. 28 after a girls’ school was bombed and the nation’s supreme leader was assassinated, oil prices have shot up significantly. The per-barrel spot price on West Texas Intermediate Crude, a popular domestic benchmark for gauging energy futures contracts, reached $98 on Friday — 40% above the price on Feb. 27 — according to OilPrice.com and Marketwatch.com.
The higher oil prices are feeding into all petroleum products, most notably gas costs. As of Friday, the nationwide average price for a gallon of regular unleaded fuel was $3.63, compared to $2.94 a month ago, according to AAA. The service said California’s average is $5.42, compared to $4.56 a month ago. In Riverside County, it’s $5.35 per gallon, compared to $4.45 a month ago.
The energy component of inflation bears a broad influence. Not only are transportation costs impacted, but all petroleum-based products, including plastics, tires, asphalt and pharmaceuticals.
The all-time record spot price of a barrel of crude oil in the U.S. occurred in July 2008, when it hit $147.27, according to the U.S. Energy Information Administration.
That was the same year the Great Recession took hold, culminating in the foreclosure crisis. Riverside County ranked among the top three locations for foreclosure activity in California over a two-year period. The Inland Empire as a whole was in the top 10 nationwide.
Kiplinger’s columnist David Payne said this week that, “Even if the war ends and gasoline prices fall back to their prewar levels,” inflation will remain elevated through the year. The exact extent was unknown.
A spokesman for Iran’s Khatam al-Anbiya headquarters in Tehran is releasing statements daily, saying the Strait of Hormuz in the Persian Gulf will remain a target of the nation’s military, with oil tankers — except those from China and a few other countries — not permitted to pass through. He’s said the American public and Europeans shouldn’t be surprised if oil prices climb to $200 per barrel.
The U.S. Energy Information Administration has labeled the Strait of Hormuz a “critical oil chokepoint” internationally. Roughly 20% of global oil supplies flow through the Persian Gulf.
The Trump administration has scoffed at questions over whether Iran can exercise complete control over the channel, with Defense Secretary Pete Hegseth telling reporters Friday, “We have been dealing with it and don’t … worry about it.”
However, CNN reported Friday that sources within the administration had acknowledged the Pentagon and others had “significantly underestimated” the impacts of Iran’s operations in the Strait of Hormuz.
There has been no clearly articulated U.S. exit strategy announced since fighting erupted.
U.S. Congressmen Mark Takano, D-Riverside, and Raul Ruiz, D-Palm Desert, have both expressed opposition to the Trump administration’s decision to back Israel in waging “Operation Epic Fury,” with Ruiz saying last week “there was no proof or evidence given to Congress and the American people of an imminent threat to the U.S.”
Rep. Ken Calvert, R-Corona, and Darrell Issa, R-Temecula, are in support of the campaign. Calvert said Iran’s “regime has failed to divert from its violent path” of supporting terrorism and, therefore, deserved to be attacked.