The war in Iran is threatening key aspects of Connecticut’s economy, though the extent of the pain will be determined by the length of the conflict, state officials said on Tuesday.
In Meriden Tuesday, Gov. Ned Lamont and state Comptroller Sean Scanlon held a press conference to highlight how in the days since the first joint U.S.-Israel airstrikes on Feb. 28, the conflict has fueled a new wave of economic uncertainty — particularly around global fuel and energy prices.
“This is a war that is jacking up energy prices across the board,” Lamont said, noting that the state may enact a gas tax holiday to offset the pain.
“Maybe it’s going to be short term, maybe it’s not,” he said. “But we’re trying to do everything we can to protect people.”
Costs rose quickly following Iran’s effective closure the Strait of Hormuz, a key passageway for tanker transit in the Middle East. Roughly one-fifth of the world’s oil passes through the strait.
Connecticut consumers are already feeling some of the pain.
As of Tuesday, gas prices in Connecticut had reached an average of $3.45 a gallon, up significantly from late February, when average prices were below $3. There are worries that costs could rise further in the coming days, though it is unlikely the state will immediately reach the $4.98-per-gallon peak it saw in 2022 after the Russian invasion of Ukraine.
For now, the war’s effect on energy prices is primarily evident in the cost of diesel fuel and home heating oil, both of which have risen significantly in recent days. According to Scanlon, diesel has risen some 23% since Feb. 28, while home heating oil costs have gone up by more than $1 a gallon.
“Global issues affect Main Street, and the effect that it’s been having on Main Street in the last week is serious and it’s very real for people,” Scanlon said.
Those in the energy business say they’re dealing with the shifts as best as they can, noting that while prices may be volatile, the country’s supplies of oil and gas are not under immediate threat. That’s largely due to the fact that the U.S. is a global exporter of oil, and when it does import crude oil, it is usually buying from neighboring countries like Canada and Mexico.
“From a supply standpoint, there is nothing whatsoever to be concerned about,” said Chris Herb, president of the Connecticut Energy Marketers Association. “When you go to the pump, there’s going to be gas to fill up. When you call your heating oil or propane dealer, you’re going to be able to get a delivery.”
But that reality has not stopped a growing sense of unease, both in the state and nationally. Stocks have been volatile in recent days, as markets adjust to rapidly shifting news about the conflict. That was also the case at the start of this week, as oil prices fell from a high of nearly $120 per barrel after President Donald Trump said that the conflict is “very complete.”
The exact length of the conflict will be a key factor in exactly how the state’s economy fares, Lamont noted on Tuesday, adding that consumers in the state could be affected by more than energy prices.
Because diesel is used to help ship goods, rising transportation costs could soon affect things like groceries and other consumer goods. The costs of fertilizer, a significant portion of which comes from the Persian Gulf, could also hit food prices if the conflict drags on.
But at this point, many things remain unknown.
As the conflict continues, state officials say they’re doing what they can to protect the consumers, many of whom are already struggling to navigate the state’s relatively high costs of living.
“We’re here to say today, to the people of Connecticut, we understand that this is happening to you,” said Scanlon. “We’re doing everything we can to try to control what we can control, but we want to make sure that people do understand that this is having an impact on us.”