LAFAYETTE, La. — As conflict continues in Iran, concerns are growing about its potential ripple effect on the U.S. economy — particularly in South Louisiana’s vital oil and gas sector.
“You don’t see the shock overnight. It doesn’t make it any less real. It just takes time to materialize and even when it does, it's hard to identify it, specifically. It's there somewhere, though,” said Ben Vincent, senior economist at the Blanco Center at UL Lafayette.
Vincent notes that, locally, changes would likely be seen first in oil and gas prices, with utilities subsequently feeling the squeeze. However, he emphasized that increased costs are often absorbed along the supply chain rather than passed directly and immediately to consumers.
“It’s not necessarily the case that energy prices go up by 10% [and] whatever share of the cost of business that is gets passed on to the customer on a 1-to-1 ratio,” he explained.
Rising oil prices can also incentivize business investment and create high-paying job opportunities in the industry, Vincent said. “It still will mean some business investment, some more employment in that highly paid sector than what we have seen otherwise.”
Still, he cautioned that any boost depends on how long oil prices remain elevated, noting that short-term spikes do not necessarily lead to lasting industry booms. “Just like the inflation effect and all of that other stuff, though, it’ll matter how long it lasts,” Vincent said.
Comparing the Iran conflict with the war in Ukraine, Vincent predicted a less severe economic toll for the U.S. “What’s most likely, even if things sustain at this level of high prices— a minor, maybe not even really noticeable with the exception of gas prices, increase in inflation,” he said.
Overall, Vincent says South Louisiana residents shouldn’t expect instant impacts and that any changes will take time to unfold in the broader economy.
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