Why oil price spikes (probably) won't lead to lasting shift

State of play: That's happening again following oil prices zoomed past the $100-a-barrel mark in the wake of the Iran war.

Driving the news: Prices dropped at least temporarily in the wake of President Trump signaling Monday evening he wants a quick end to the conflict, as well as talking up ways to lower oil prices.

Reality check: Energy transitions hinge on stable policies and market signals that last for decades.

• Temporary price jolts from unstable geopolitical unrest haven't produced durable change — at least not in the U.S.

What they're saying: "Consumers have been riding an oil price roller coaster for 20 years now," said Bob McNally, who leads consultancy Rapidan Energy Group and advised President George W. Bush on energy security.

• This includes everything from the 2008 recession to the 2020 COVID-19 pandemic.
• "They've learned that booms follows busts, and vice versa. Absent stable and higher fuel prices, we are unlikely to see a rapid and lasting shift to EVs."

How it works: This recurring debate often skips key distinctions.

• Oil is used primarily in transportation and priced on a global market. That's why U.S. gasoline prices rise even when domestic production is strong — and why this article centers mostly on cars, not electricity.
• Natural gas is priced more regionally. America's ample supplies help shield consumers from global shocks. Gas fuels power plants and industry — but rarely cars.
• This is why oil and gas prices don't move in perfect sync.

Zoom out: The U.S. economy is far less oil-intensive than in past eras of price spikes, which cushions the blow compared with the 1970s or even the 2000s.

• But people will still face sticker shock at the pump, and their pain is all that will matter to them — not whether it was worse in 50 years ago.
• So expect it to show up on the campaign trails.

Zoom in: Even the most extreme scenarios analysts are currently modeling would last months — not years.

• Rystad Energy looked at two- and four-month interruptions to traffic through the Strait of Hormuz, a vital artery for global oil and gas.
• The shorter scenario appears more likely, the firm said Monday, though it warned more extreme outcomes beyond even four months "cannot be ruled out."

Yes, but: There are two caveats — one geographic, one historic.

• After Russia invaded Ukraine in 2022, Europe significantly reduced its dependence on Russian gas. This was driven partly by Russia itself cutting off supplies, and then Europe scrambling to replace that fuel and more (though Europe still imports some Russian gas.)
• Analysts are calling this moment the biggest disruption in oil-market history, as Ben Geman reported Monday. If geopolitical turmoil were ever going to force a structural move away from oil, this would be the test.

"What matters is not simply how high oil goes, but whether this episode reshapes perceptions of geopolitical risk in a durable way," said Jason Bordoff, founding executive director of Columbia University's Center on Global Energy Policy who previously advised then-President Barack Obama on energy security.

The intrigue: Interest in electric cars tends to surge during periods of high gasoline prices, said Jessica Caldwell, head of insights at Edmunds, the car-buying site.

• But she added: "The difference today is that consumers are navigating an extremely tough financial environment," Caldwell said by email, pointing to persistently high interest rates and higher transaction costs.

What we're watching: How long this all lasts.

• "Ultimately, adoption may hinge on how long consumers believe geopolitical tensions will continue to put upward pressure on oil prices," Caldwell said.

Axios' Joann Muller contributed reporting.