It isn’t just about gas prices

We’ve all seen the news and felt it at the gas station. I live in Silicon Valley, and I filled up my gas tank yesterday with $6.40/gallon fuel. The Strait of Hormuz is closed because of the U.S. war on Iran, and American consumers are feeling it in the price of gas. Supply chain pros are feeling it in fuel surcharges on transportation and higher prices on raw materials. Countries around the world are shortening school and work weeks because of shortages of fuel. Some communities in India cannot get cooking oil, a basic need for most families. This is a global squeeze. And, of course, there is the grave human cost of soldiers and citizens dying.

Oil producers in the Gulf have shut down refineries because storage tanks are full and there is no place to store refined products. Ships are stuck in port and cannot pass the blockades. Insurance companies will not insure cargo moving through the Strait, so vessel operators will not take the risk of moving uninsured cargo.

What else besides gas?

Fuel prices and supplies aren’t the only things affected.  Products that use petroleum or natural gas as ingredients in their products are also feeling the pinch and long-term concern. Fertilizer, for example, uses nitrogen and ammonia from natural gas to produce nitrogen-based fertilizers. Farmers in California’s Central Valley, where 40% of America’s fruits, nuts, and vegetables are grown, are in emergency mode, trying to find alternatives to synthetic fertilizer.  Fertilizer prices are skyrocketing, which will raise the cost to grow produce and the price to consumers.

Over 99% of plastics are made from crude oil and natural gas. Consider the plastics used for products at your local grocery store.  Almost everything is packed in plastic or in plastic-coated wrapping. We use plastic bags when we select unwrapped produce. Think about this as you look around at the grocery store. If food producers and grocery stores cannot wrap products in plastic because of short supply, they will be unable to sell some products, or the price for packaged products will increase, and that will result in increased prices to consumers.

Specialty chemicals made from petroleum products are not moving either.  These chemicals are used in adhesives, coatings, cosmetics, and pharmaceuticals. Even helium, a by-product of natural gas production, is not moving from Iran.  Helium is used in semiconductor production, and this will likely result in semiconductor shortages if the war continues.

Shortages won’t be over when the war is over

As veteran supply chain professionals know, the effects of supply chain disruptions do not end immediately after the disruption is solved. It’s more likely to be many months or even years before supplies and shipping return to normal levels.  We are likely to see shortages and increased prices for some time. Months of production shutdowns in the Middle East will result in shortages and scarce supplies. Price increases are inevitable. It’s the law of supply and demand.

Another wake-up call

Global supply chains are complicated with scores of moving parts and layers of participants. Disruptions mean that many parts of global supply chains will be affected.  As Brian Straight pointed out in his “Straight Talk with Brian Straight” on May 3, 2026,

  “Perhaps it’s better that we just accept that we operate in a world of constant disruption and that is normal, so we can move on.”

The thing to do now is to continuously plan for alternative ways to address disruptions because they keep coming. Whether it's tariff changes, unexpected wars, changes in geopolitics, or natural disasters, nothing is normal in supply chains anymore.

This is certainly an interesting and exciting time to be in supply chain management. We must now be strategic thinkers and planners for what’s around the next bend in the road.

SC
MR