Why Gas Prices Just Keep Going Up
Episode
23 min
Read time
2 min
Topics
Personal Finance, Fundraising & VC, Product & Tech Trends
AI-Generated Summary
Key Takeaways
- ✓Saudi Arabia's export workaround: When the Strait of Hormuz was choked off at the war's start, Saudi Arabia rerouted oil through its East-West cross-country pipeline to the Red Sea, insulating global markets from the war's full impact. Understanding this buffer existed explains why oil prices had not yet reflected the war's true economic cost until now.
- ✓Houthi strategic positioning: The Houthis seized Yemen's Red Sea coastline and gained direct control of the Bab el-Mandeb Strait, a chokepoint governing access to the Red Sea. Combined with Iran's interest in pressuring the US economy, this dual motivation — Houthi political leverage in Yemen plus Iranian escalation strategy — made this offensive predictable to informed analysts.
- ✓Pipeline vulnerability as a recurring risk: Even if Saudi Arabia repairs the East-West pipeline within weeks, as early reporting suggests, the infrastructure remains exposed to repeated attack. A repaired pipeline provides no durable solution while regional conflict continues, meaning oil supply disruptions should be treated as ongoing rather than temporary events with a clear resolution date.
- ✓US non-intervention calculus: Despite Saudi Arabia's repeated requests — including as recently as the week of this episode — the Trump administration declined direct military involvement against the Houthis. Trump's reasoning centers on the Houthis' track record of outlasting wealthier military opponents, including a prior brief and unsuccessful US airstrike campaign, making renewed engagement an unattractive strategic prospect.
- ✓Oil price as war's hidden cost: Saudi Arabia's pipeline workaround masked the true economic impact of the US-Iran war on global energy markets for months. Now that both the Strait of Hormuz and the Red Sea route are effectively blocked, oil prices surpassing $100 per barrel reflect the war's actual supply disruption — a cost consumers and businesses should expect to persist long-term.
What It Covers
Florida gas station owner Cameron Joudi witnessed a 20-cent overnight price jump to $4.19 per gallon, prompting NYT reporter Vivian Niraim to explain how Houthi forces seizing Yemen's Red Sea coastline and attacking Saudi Arabia's East-West pipeline simultaneously eliminated the kingdom's two remaining oil export routes, accelerating global price increases.
Key Questions Answered
- •Saudi Arabia's export workaround: When the Strait of Hormuz was choked off at the war's start, Saudi Arabia rerouted oil through its East-West cross-country pipeline to the Red Sea, insulating global markets from the war's full impact. Understanding this buffer existed explains why oil prices had not yet reflected the war's true economic cost until now.
- •Houthi strategic positioning: The Houthis seized Yemen's Red Sea coastline and gained direct control of the Bab el-Mandeb Strait, a chokepoint governing access to the Red Sea. Combined with Iran's interest in pressuring the US economy, this dual motivation — Houthi political leverage in Yemen plus Iranian escalation strategy — made this offensive predictable to informed analysts.
- •Pipeline vulnerability as a recurring risk: Even if Saudi Arabia repairs the East-West pipeline within weeks, as early reporting suggests, the infrastructure remains exposed to repeated attack. A repaired pipeline provides no durable solution while regional conflict continues, meaning oil supply disruptions should be treated as ongoing rather than temporary events with a clear resolution date.
- •US non-intervention calculus: Despite Saudi Arabia's repeated requests — including as recently as the week of this episode — the Trump administration declined direct military involvement against the Houthis. Trump's reasoning centers on the Houthis' track record of outlasting wealthier military opponents, including a prior brief and unsuccessful US airstrike campaign, making renewed engagement an unattractive strategic prospect.
- •Oil price as war's hidden cost: Saudi Arabia's pipeline workaround masked the true economic impact of the US-Iran war on global energy markets for months. Now that both the Strait of Hormuz and the Red Sea route are effectively blocked, oil prices surpassing $100 per barrel reflect the war's actual supply disruption — a cost consumers and businesses should expect to persist long-term.
Notable Moment
Cameron Joudi described checking GasBuddy the afternoon before the price spike and seeing normal $3.99 pricing, only to learn the next morning from a beer distributor — not any official source — that every surrounding station had already moved to $4.19 overnight without explanation.
Episode Transcript
If you like YouTube, you'll love YouTube Premium. Hi. Sean Evans from Hot Ones here. With YouTube Premium, I get ad free videos, offline downloads, background play, and so much more. Try YouTube Premium for two months free at youtube.com/premium. Trial eligibility varies. Terms apply. Cancel anytime. From the New York Times, I'm Rachel Abrams, and this is The Daily. About a month into the war with Iran, back when gas was at $3.99 a gallon, daily producer Anna Foley headed to Florida to talk to a gas station owner about how prices at the pump were feeling both for him and his customers. I would love for this to be over next week, and I go back to $2.79 a gallon. That'd be awesome. I hope beyond hope that it is temporary and it does not last long. But, yeah, I I do worry about the longevity of high prices. That was back in March. But recently and somewhat unexpectedly, that gas station owner, Cam Judy, reached out to us again. Hello? Hey, Cam. Hey, Anna. How are doing? He had an update. So a few days ago, you texted me because of this kind of wild thing you were seeing happen at your pumps. So I just wanna know what happened. Tell me the story. Yeah. So I checked the gas prices. I believe it was Wednesday. I was working until around 03:00 in the afternoon. Just checking the prices and see what was going on, and everything seemed normal. Was Where were you checking them? I was checking them on GasBuddy, the the different gas stations, see where everybody was priced at. I was sitting at $3.99 a gallon for regular gas. And the next day, I opened the gas station, and I was talking to my beer distributor. And he was like, what's your gas at, Cam? And I said, I'm still at $3.99. And he's like, wow. All all the other gas stations I passed by on the way in here all went to 04:19 this morning. And I was like, there's no way. There's no way. It was $3.99 yesterday. Wow. That's a a 20¢ jump in price overnight. That's pretty that's pretty crazy. It's pretty shocking. And I I didn't believe them until I, you know, I checked the gas stations in and around me. And sure enough, every single one of them was at $4.19 for regular gasoline. I said, wow. I I guess I really need to as much as I don't want to, I gotta go up 20 a gallon. Yeah. Did customers notice? And what did they say to you? Oh, yeah. Oh, yeah. I mean, the the one phrase out of every everybody's mouths were just, what's going on with these gas prices? When you guys came down here last time, of course, the the conflict over in the Middle East area had just started. It was Mhmm. It was it was very prominent in the news. Everybody …
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“Cameron Joudi described checking GasBuddy the afternoon before the price spike and seeing normal $3.99 pricing, only to learn the next morning from a beer distributor — not any official source — that every surrounding station had already moved to $4.19 overnight without explanation.”
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