ANN ARBOR – Michigan drivers may finally be getting some relief at the gas pump, but don’t expect prices to return to pre-war levels anytime soon.

Patrick De Haan, head of petroleum analysis at GasBuddy, said in an interview with MITechNews that even if the United States and Iran reach a peace agreement and reopen the Strait of Hormuz, gasoline prices could remain elevated for weeks or even months as global oil supplies slowly work their way through the supply chain.

“Even if oil flows again through the Strait, it will take weeks for that oil to reach its destinations,” De Haan said.

The warning comes as Michigan gasoline prices have fallen to an average of $4.08 per gallon, down about 75 cents in recent weeks as traders anticipate a possible agreement that would restore oil shipments through one of the world’s most important energy corridors.

But De Haan cautioned that the world is still dealing with the consequences of a 110-day disruption that removed enormous quantities of crude oil from global markets.

“The Strait has been closed for 110 days, meaning some one and a half billion barrels are not flowing,” he said. “The U.S. Strategic Petroleum Reserve is near its all-time low set in 1983.”

Why Michigan Consumers Should Care

While gasoline prices grab the headlines, higher oil prices affect far more than what drivers pay at the pump.

Diesel fuel powers the trucks, trains and ships that move food, consumer goods and industrial products throughout Michigan and the rest of the country. Higher fuel costs eventually work their way into grocery bills, airline tickets, shipping charges and the price of countless consumer products.

For Michigan’s manufacturing-heavy economy, energy price spikes can also increase operating costs for businesses already facing higher labor expenses, supply chain challenges and economic uncertainty.

Even if gasoline prices continue falling, economists warn that inflationary pressures from higher transportation costs often linger long after oil markets begin to stabilize.

By The Numbers

  • $4.08 per gallon – Current average Michigan gasoline price
  • 75 cents – Recent decline in Michigan gasoline prices
  • 110 days – Length of Strait of Hormuz disruption
  • 1.5 billion barrels – Estimated oil not delivered during the closure
  • 1983 – Last time U.S. emergency oil reserves were this low

What To Watch

Consumers should monitor:

  • Progress in U.S.-Iran negotiations
  • Michigan gasoline prices
  • Global oil inventories
  • Strategic Petroleum Reserve replenishment efforts
  • Energy-related inflation reports

Any deterioration in those indicators could signal additional price increases for fuel and consumer goods later this year.

America’s Emergency Oil Cushion Is Running Low

One of De Haan’s biggest concerns is the condition of America’s emergency oil reserves.

The Strategic Petroleum Reserve was created after the 1970s energy crisis to provide a supply cushion during wars, natural disasters and major market disruptions.

Over the past several years, however, the reserve has been tapped repeatedly to help stabilize energy markets and reduce pressure on consumers.

As a result, emergency stockpiles now sit near their lowest level in more than four decades.

If another major disruption occurs before inventories are replenished, policymakers would have fewer options available to offset shortages.

“The U.S. Strategic Petroleum Reserve is near its all-time low set in 1983,” De Haan said.

Another Disruption Could Send Prices Soaring

While current market sentiment is focused on a possible agreement between the United States and Iran, De Haan said the situation could change quickly if negotiations fail.

In that scenario, gasoline prices could surge well beyond current levels as countries around the world compete for limited supplies.

“We’ve already seen countries banding together to reduce consumption,” De Haan said.

He also pointed to inventory concerns at Cushing, Oklahoma, the nation’s primary oil storage and delivery hub used for benchmark crude contracts.

According to De Haan, inventories at Cushing are approaching operational minimums, raising concerns about how much additional supply can be withdrawn if market conditions deteriorate.

If the Strait of Hormuz remains disrupted or future tensions emerge, Michigan motorists could once again face gasoline prices near or above record levels.

A Long Road Back To Normal

Even if a peace agreement is reached, restoring global oil markets will take time.

Tankers must return to service, supply chains need to be rebuilt and inventories depleted during the crisis must be replenished.

That process could take weeks or months, meaning consumers may continue feeling the effects of the disruption long after the headlines move on.

For Michigan drivers, the recent decline in gas prices is certainly welcome news.

But according to De Haan, the energy crisis may not be over yet.