SHELBY TOWNSHIP, Mich. (WXYZ) — Gas prices in Michigan jumped 14 cents overnight as the conflict between the United States, Israel and Iran enters its fifth day, with economists warning the economic fallout is only beginning.
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Michigan's average gas price climbed from $2.99 to $3.14 per gallon in a single day, according to AAA. In cities like Shelby Township, prices reached $3.39 per gallon. The spike comes as the conflict disrupts global oil markets and rattles investors, sending the Dow Jones Industrial Average plunging more than 1,000 points Tuesday.
Adrienne Woodland, a spokesperson for AAA, said the effects of the conflict are already being felt at the pump.
"We're seeing the effects of the conflict at the pump. Michigan's average is up $0.14 overnight from 2.99 yesterday to $3.14 a gallon today," Woodland said. "In metro Detroit, the average is currently $3.14 a gallon for regular unleaded. That's up 11 cents from yesterday."
With President Donald Trump saying the conflict is expected to last weeks, economists say prices are likely to climb even higher.
Michael Greiner, an economist and professor at Oakland University, says fear and uncertainty are driving the market downturn.
"There's definitely this fear among investors and they hate uncertainty. And nothing creates more uncertainty than a war," Greiner said.
When asked whether the worst is still ahead, Greiner said the full economic impact has yet to be felt.
"Oh, I think that's the case. I think we haven't even seen the beginning of this in terms of the impact," he said.
Hear more on the impact from Michael Greiner below:
For everyday drivers, the rising costs are already straining household budgets.
"Having to pay more for gas is definitely not helping. Barely making it by as it is," metro Detroiter Chad Gray said.
"I just don't know how people can survive on one income anymore, even two incomes. Now you have to have three jobs in order to make it," Shelby Township resident Corinne Narra said.
Iran has vowed to attack any ship attempting to pass through the Strait of Hormuz, a critical artery for global oil transportation. Woodland warned that a blockade of the strait would have far-reaching consequences.
"With that strait being blocked, it causes a ripple effect and it affects even countries that do not rely heavily on oil from the Middle East," she said. "Oil is a global market, so if there's issues in one part of the globe, it can have an effect throughout the world."
In the Oval Office Tuesday, Trump said he expects oil prices to go back down after the conflict with Iran concludes.
"We have a little high oil prices for a little while, but as soon as this ends, those prices are going to drop," Trump said.
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Beyond gas prices and the stock market, Greiner says the conflict also has the potential to affect Michigan's auto industry and broader business activity.
"Businesses really are going to try to freeze their investments cause they don’t know what’s gonna happen," he said.
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Still, he expressed optimism about the country's long-term resilience.
"The U.S. economy is very strong. We have an incredible ability to bounce back from crises. We've seen it time and time again and even though this might cause some shorter discomfort, I think that in the long run, the United States will be fine," Greiner said.
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