Gas Prices and Iran’s Oil Challenges

In the U.S., gas costs a pretty penny, whereas in Iran, it’s only about 12 cents per gallon. With the Strait of Hormuz closed off, Iran is trying to manage its oil supplies domestically, leading to some unusual methods like burning oil at wellheads and using buckets and pickup trucks to transport it.

This approach, however, is not really a long-term solution. Eventually, they’ll hit a wall.

To explore the situation further and its implications for U.S. gas prices and energy stability, oil expert Tim Stewart shares his insights.

Glenn Beck asked Stewart how soon Iran might have to cease its oil production altogether.

“From what we know, they are nearly at that point,” Stewart replied.

He elaborated that oil is typically stored in various forms—tanks, pipelines, trucks, and ships—and is in constant motion. But the current blockages have effectively halted “floating storage,” putting pressure on other systems. At some point, lowering the well’s valve becomes necessary.

“And that’s exactly what the Iranians have done,” said Stewart.

Yet, this hasn’t truly resolved their issues. Iran’s main oil fields are considered “legacy fields,” which means the infrastructure is quite old.

Stewart mentioned, “These areas have water, pressure, and immigration challenges.”

Before the blockade, these fields were already nearing their maximum capacity, so bouncing back to full production after the crisis may be challenging.

Glenn noted that this “current slowdown” might have lasting effects on the ability to increase production to 3 million barrels a day. It feels like we’re reaching the end of that road right now.

In light of Iran’s troubles, Glenn wanted to discuss how America can tackle its own oil-related challenges, independent of international issues.

Stewart pointed out that while the U.S. is the top oil producer globally, domestic refineries were primarily designed for heavy, sour crude from abroad. This makes it tricky to process the “light, sweet crude” we produce ourselves. It’s been a complicated dance in the oil market for years.

Things, though, are starting to shift. Stewart mentioned that companies are now investing in refineries that can handle light-sweet crude. Wall Street seems to be recognizing that fossil fuels will remain essential for a while. Even OPEC seems to be showing some cracks, particularly with the recent withdrawal of the United Arab Emirates.

Despite this change, a significant global oil shortage remains, with a deficit of around 450 million barrels.

“It’s a complex story about how this shortfall will eventually be filled,” Stewart said.

Glenn praised President Trump’s “America First” approach, claiming it has positioned the U.S. as a leading force in oil production. However, he expressed concern about the economic strain on American citizens. While oil companies may profit, the average person still faces high gas prices.

“Has anyone ever considered…” he prompted, “…if there’s a way to offer some relief to the American public by slightly reducing our profits?”

Stewart acknowledged the industry’s polarization. Most members of the American Oil and Gas Association are independent producers, likening them to farmers. “When you auction off a cow, the market dictates the price,” he said, pointing out similar principles apply in oil.

Stewart highlighted that industry players prefer price stability, ideally between $67 and $85 per barrel. “It allows for long-term planning,” he noted. This stability benefits consumers as well.

“The sweet spot is about $70 to $90 per barrel,” he added. That would translate to gas prices around $2.95 to $3.15 per gallon, which seems to keep people satisfied.

As for immediate support for consumers, he suggested states should reassess their fees and taxes, perhaps offering exemptions or holidays.

“However, any relief could be short-lived unless something drastic, like a tweet or a drone strike, sends oil prices soaring,” Stewart cautioned.

Glenn wondered aloud about how quickly gas prices might decline if things returned to normal conditions. “If the Strait reopens in a month, how fast will gas prices drop?”

Stewart was optimistic, indicating we could see a decrease over the summer in the U.S.

Reopening the Strait would help allies in Europe and Asia source oil from different countries, which might help drive gas prices down there.

But Glenn had to ask, how low can prices go?

Stewart predicted a range of $2.85 to $3.15 as reasonable, suggesting that’s where most people feel comfortable.

“The economy needs energy to grow, but we don’t want it so cheap that no one is working,” he reflected. “It’s about finding that balance.”

If you’re curious to learn more, check out the video above.