US-Iran Tensions to Increase Gas Prices?

Escalating rhetoric, threats could hit Coloradans' wallets – hard


DENVER (July 25, 2018) – On the heels of Iranian President Hassan Rouhani's recent threats to block the Strait of Hormuz amid escalating Washington-Tehran tensions, AAA warns that increasing geopolitical instability could hit home here in Colorado – in the form of increased gas prices.

A prolonged conflict over the Strait of Hormuz – through which 40 percent of the world's oil exports pass in tankers – could send the price of crude oil skyrocketing, affecting domestic gasoline prices across the country and in Colorado.

Already, Coloradans are spending $70 more each month to fill up compared to last summer – a 25 percent year-over-year increase. Per AAA analysis, gasoline expenses already account, on average, for nine percent of the average Coloradan's 2018 annual income. That's a two percent increase over the summer of 2017. Barring significant disruptions to the crude oil market, Coloradans can anticipate paying between $2.75 and $3.05 per gallon, on average, through Labor Day.

The closure of or military confrontation in the Strait of Hormuz could drive prices upward of $3.21 per gallon, on average, in Colorado. According to a recent AAA survey, only one-in-four Coloradans said they'd change their travel plans if gas prices hit $3.00 per gallon, though nearly half said $3.50 would be the game changer for their summer plans.

"All eyes should be on Iran right now, especially if you're planning to hit the road this summer," said AAA Colorado spokesman Skyler McKinley. "Gas prices have trended high throughout 2018 as a result of soaring demand, but there's a lot of room to go even higher given continued political instability in oil-producing regions."

Additional Factors
Pump prices are actually trending downward in the second half of July. The average price of a gallon of regular unleaded gasoline ranges from $3.21 in Vail to $2.71 in Boulder - Longmont, for a statewide average of $2.81. That's up from $2.27 a year ago, but down from $2.83 a month ago. AAA has identified some additional factors that could drive gas prices – up or down– in the coming months.

  • Production. OPEC has promised to pump more oil in response to strong global demand, and U.S. output is likely to jump as pipelines are built to transport crude from West Texas to Gulf Coast refineries. Both factors could drive the price-per-gallon sharply downward. 
  • Hurricanes. According to the National Oceanic and Atmospheric Administration (NOAA), there is a 75 percent chance of a "near-or-above-normal" level of major storms this year. Moreover, NOAA's forecasters predict a 70 percent chance of 10-16 named storms – of which five to nine could become hurricanes with winds of at least 74 miles per hour. The mere threat of a storm could force oil and gasoline companies, especially along the Gulf Coast, to halt gas operations, potentially leading to spikes in gas prices and limited regional supply. 
  • Exports. Gasoline exports from the U.S. have grown throughout 2018. In fact, the Energy Information Administration's (EIA's) final measurement for March 2018 showed that exports hit 951,000 b/d and became the highest March rate on record. This trend is likely to continue throughout the summer, growing closer to one million b/d, which could help boost gas prices domestically because of robust demand. More than half of the U.S. gasoline exports go to Mexico, according to the EIA.


  • Demand. According to the EIA's latest reading for consumer gasoline demand, March 2018 saw nearly 9.45 million b/d, representing the strongest demand measurement for a March on record and a one percent increase from last year. AAA expects the high and potentially record-breaking consumer demand trend to continue through the summer, pushing prices higher.


Tips to Save Money on Gas

Motorists can't always control how much they spend on gas. But they can control how much gas they use. Here's how to improve gas mileage: 

  • Observe the speed limit. Not only is it safer, it can help you save money.
  • Lose the weight. The heavier your car, the more fuel it uses.
  • Accelerate gradually. Avoid jackrabbit starts.
  • Drive during cooler parts of the day, if you can. Cooler, denser air can boost power and mileage.
  • Maintain recommended tire pressure. Low pressure reduces fuel economy and can damage tires.


About AAA Colorado
More than 680,000 members strong, AAA Colorado is the state's greatest advocate for the safety and security of all travelers. As North America's largest motoring and leisure travel organization, AAA provides more than 53 million members with travel, insurance, financial, and automotive-related services - as well as member-exclusive savings. For more information, visit