Rising energy prices and what they mean for US President Trump | Global News Podcast

Welcome to the BBC's Global News podcast. on YouTube. I'm Andrew Peach. I'm joined. today by the BBC's business editor, Simon Jack. Simon, we hear a lot about. how the conflict um has sent the world. economy into turmoil. What does that. mean right now for people like you and. me? Well, two things to mention, I think. First of all, it's impossible to. overstate how pervasive energy prices. are. By that, I mean they get into the. cost of just about everything. Some. obvious ways, like when you fill up with.

petrol, gasoline, we've seen those. prices rise. And of course, we've seen. the price of gas, and for a lot of. people, that means home heating, we've. seen those rise. But it goes deeper than. that. It goes, for example, fertilizer. is made with gas, with other crude oil. um. extracts in it. And so, that starts. feeding into food prices. So, you can. see that there are so many ways that. energy prices get into the price of. everything. So, the obvious ones, in the. UK, we've seen petrol prices go from. £1.32.

a liter to £1.42 a liter since these. hostilities began. And that's before the. big spike we've seen in the last 48. hours. So, I'd expect another 5-10 p on. those. Same for diesel. In the UK, we uh. import more of that than we refine. So, those are some of the issues, and. obviously, the gas prices will add to. lots of industrial processes and home. heating. So, the other thing that. matters is not only their pervasiveness, but how important it is how long these.

hostilities go go on for. Now, there's. been a lot of talk about maybe a few. weeks, maybe it wouldn't. But in the. last 48 hours, Israel hit an Iranian gas. field. Iran then retaliated. um with hitting a Qatari gas field. And. up to now, everyone's been sort of. bending over backwards not to hit the. energy infrastructure. Even when the US. attacked Kharg Island, huge big thing um. a base off Saudi. They were going after. the military installation there, not the.

energy in. the energy installation. And so, what. this has done is sort of crossed a bit. of a Rubicon, which is it's bringing the. energy infrastructure in, and that's. what has seen energy prices surge again. today, and has made people think, well, if we have this tit-for-tat energy. infrastructure kind of strikes, then. that could and will make this conflict. last longer and have a more damaging. impact on energy prices and the world. economy. Cuz Donald Trump said a few. days ago himself, we've left the pipes,

didn't we? We We purposely didn't take. out the pipes. We could, but we don't. want to do that because we know what. impact that will have. >> And there's a conflict, you know, the US. looking furious and sounding furious. that Israel struck Iran. And by the way, that Iranian plant they struck it mainly. supplies domestic gas to the Iranian. people. Didn't really matter much for. exports to the rest of the world. But. the retaliation on the Ras Laffan. installation, the Qatari one, that is. 20% of world.

liquefied natural gas. So, that was a. thing that basically suddenly something. that seemed kind of contained has gone. beyond that, is is now not contained, and that's why we've seen this extra. surge in the last 24 hours. Donald Trump says the US has all the oil. it needs. It's certainly less reliant on. imported oil than other countries. So, how does that play into his. decision-making here? Well, it does have. all the oil it needs. In fact, over the. last 20 years, the shale fracking. revolution in the US has turned the the.

US into the biggest producer and. exporter of of oil and gas in the world, overtaking Saudi Arabia in some cases in. some measures. That doesn't mean that the price doesn't. move. In in fact, I was looking at US. gasoline, what they call petrol prices. there, before these hostilities started, they were $2.98. a gallon. they're now $3.84. So, they've. gone up, you know, that's up a third in. that period. Now, the US voter and.

consumer is incredibly sensitive to. that. It's one of those things that you. do all the time. Inflation, when you you. notice it when on things that you do. regularly, like fill up your car. And. again, we're coming into that season, which in America they call it the. driving season over over the US. Remember that everyone lives in their. car in the US. People are very sensitive. to that. So, that creates a big. political problem for Donald Trump. So, although they are self-sufficient, it. doesn't mean that the price don't go up. Cuz by the way, lots of people are. buying. gasoline, liquid natural gas from the.

US, and will be buying even more of it. to make up for some of the shortfalls. we're seeing coming out of the Gulf. In. the end, the end of the conflict is. likely to be decided by Donald Trump, who is going to be under domestic. pressure. He's got midterm elections. coming up later in the year. Gas prices. are already going up. A lot of his own. supporters are not that keen on. involvement in the war anyway. >> Yeah. Well, he had two sort of election. promises, no foreign forever wars, and. I'll make sure that cost of living goes. down, you have cheaper gasoline. Both of.

those look, well, blown out of the. water, frankly. So, you're right, and a. lot of people have been using uh Donald. Trump's political pain threshold on this. as a kind of benchmark for how long this. conflict will actually go on. I think that's getting more complicated. now. I think it's becoming increasingly. apparent that although he was very hazy. about what the precise objectives of. this conflict were, and some people say. that's so that he could declare victory. and. at any point and say, "Well, I've I've.

done what I am now telling you was the. point that I was trying to make." I. think it's getting harder and harder now. to extricate himself from this without. ongoing um. you know, conflict in the region now. that so many other countries have been. brought in. Some European leaders are. saying, you know, "We're reluctant to go. in and try and help clear up the mess. saying, you know, you broke it, you own. it. So he's in a difficult political. position and. but but he will not suddenly want to. won't want to be having aircraft. carriers in the Gulf when he's going.

into midterm elections in November. That's going to be crucial. We had an. energy crisis affecting Europe when we. saw the full-scale invasion of Ukraine. There was a lot of talk then about the. need for the energy sector not to be so. reliant, so sensitive to this kind of. international development. We don't seem. to have learned much since then. >> Well, we were definitely the lesson we. learned from that was that we that. Europe needs to be less reliant on. Russian gas. And actually by and large, they did quite a good job of weaning. themselves off most of it pretty.

quickly. But that wasn't the same as. wean yourself off gas completely. And in. fact, a lot of the Qatari and the US. supply. basically filled in that gap. So. they they did pivot away from Russian. gas, pivoted towards. you know, in some ways gas coming out of. the Gulf. Now, you can see this in two. different ways and the argument's being. made. the argument's being made two ways. One.

is what you need to do is get off fossil. fuels that come from conflict-ridden. parts of the world, often bought from. people you don't particularly want to be. friends with and that's why you need. renewables. Others are saying that's. never going to fill the gap. What we. need to do is drill and and and find. some of our own resources. That debate. is alive and well right now in the UK. You can see it from both angles, but at. the end of the day, there aren't that. many places where gas comes out of the. ground and wherever it does, there's. usually there's usually trouble. And. it's interesting to see Iran clearly.

using this as a weapon of war to take on. a a mighty opponent. What other. countries might have that in their. sights, might be looking at this. thinking, right, okay, that's that's. conflict is going to play out in the. future.". >> It's no surprise, is it? I I think to. see Iran doing this. And if the US. didn't see this coming, they really. should have done because obviously. they're militarily no match for either. Israel or the United States. But they do. have some very, very powerful things. they can flex like the Straits of. Hormuz. Uh like they they you know, uh.

lots of other energy infrastructure are. within missile range. Um I suppose you I. mean I don't there's no more there's no. other area in the world where it's as. concentrated as this. You know, obviously there's parts of West Africa. where there's lots of oil. Um there's. you know, there's the Gulf of Mexico. There's Venezuela and we've seen. obviously. And I I don't think in all of. this we should forget. the China angle on this. What when the US thinks about stuff, it.

thinks mainly about how does this affect. us versus China. And if you look at Venezuela where they. got a sort of friendly interim person in. there. Venezuela's 3% of China's oil. Iran is. 16%. You add those two together, that's. 19%. That is not insignificant. If you. had useful people that you could have. influence over who are supplying nearly. a fifth of China's oil, that gives you a. bit of leverage when it comes to intense. negotiations in the future which will be. China's got all the rare earth metals.

If the US has got a stranglehold on some. of their energy, that's a basis for. negotiation. I think that don't forget. the China angle in all this cuz China. and other Asian economies are much more. reliant than the West on exactly these. uh sources of energy. And Simon, just to. finish where we started in terms of the. impact on you and I, the biggest factor. by the sound of it is how long this goes. on. That will determine how many months. or years of economic pain we're talking. about. >> Yeah. So the duration of it is really.

important. But I went back to I get go. back to my comments about how pervasive. it is. We've just had the the three. central banks, the US, the European. Central Bank and the Bank of England all. not cut interest rates when a lot of. people expected them to do that. And. that's because the inflationary impact. of this means that they don't So, something that So, when you see what's. going on in the Straits of Hormuz, it's. affecting the cost of your mortgage. And. in fact, mortgage rates have gone up by. about half a percentage point. Doesn't.

sound like a lot, but it's gone from. 3.75 to 4.25. That's half a percentage. point. If you're borrowing a couple of. hundred thousand pounds or dollars, that. makes a great deal. So, it does affect. every facet of your life. And like I. say, and you've pointed out, all depends. on how long this lasts. The estimation. for how long it lasts, that has just got. longer given the events the last 48. hours. Simon, thank you. That's the. BBC's business editor, Simon Jack. And. if you'd like to hear more of the Global. News Podcast, click the link below. Thank you for joining us.