To The Moon

Key Points The US-Iran conflict, the blockade of the Strait of Hormuz, and the surge in oil prices are squeezing businesses across the entire supply chain and increasing the financial burden on households. This week, prices for diesel and jet fuel have skyrocketed, leading companies like Amazon and JetBlue to impose new fuel surcharges. Experts describe this as a "hidden tax" on consumers, but many small and medium-sized enterprises in the US lack the ability to pass these costs on to their customers. Nick Friedman, co-founder of College Hunks Hauling Junk & Moving in Tampa, Florida, stated that his business is caught in a multi-faceted operational crisis: high mortgage rates are hampering the real estate market, rising insurance premiums are eating into operating costs, and now the US-Iran conflict and soaring diesel prices are severely compressing profit margins. Despite this, he is hesitant to raise prices. "We're stuck in a lose-lose situation," Friedman admitted. "If we raise prices, we risk losing customers." He noted that while large corporations can often implement surcharges that the market accepts, many major players have already adjusted their pricing in response to the across-the-board surge in fuel costs. This week, United Airlines and JetBlue increased baggage fees, while Amazon announced a 3.5% fuel surcharge for sellers on its platform. Amazon claimed this surcharge is significantly lower than those levied by other leading logistics companies. JetBlue stated that as operational costs rise, it will continuously evaluate cost-control measures to maintain competitive base fares while enhancing the travel experience. For small and medium-sized businesses like Friedman's, there is little room for such pricing adjustments. "Travelers have no choice but to fly; but moving services are different," he explained. Consumers can easily opt for cheaper, less reliable movers, or even enlist friends with pickup trucks, leading to higher idle rates for his fleet of 2,000 trucks. Even when vehicles are idle, refueling them remains a major expense. Friedman said fuel costs previously accounted for only 3-5% of revenue but have now doubled to 6-10% since the conflict began. His business operates on a franchise model with over 200 locations nationwide, many of which are now facing operational crises. Although the freight industry is most directly impacted, the negative effects of rising diesel and jet fuel prices will soon ripple through all sectors. Deacon Vanderbilt, Chief Investment Officer at MassMutual, pointed out: "Downgrading in consumption typically starts with non-essential spending; people cut discretionary expenses first." He analyzed that energy price hikes essentially function as a universal hidden tax, affecting all goods and services. If the conflict ends shortly, people might use savings to weather the price surge; but if it prolongs, reduced consumption and an economic slowdown will quickly become apparent. Markets had hoped President Trump's national address would outline a ceasefire plan, but his vague remarks provided no clear timeline, sustaining market volatility. Unlike the economic crises of the Great Depression or the COVID-19 pandemic, the government now has limited options for relief policies. Vanderbilt stated bluntly: "There won't be another massive government bailout like during COVID." The Federal Reserve is also in a bind. Given the risk of resurgent inflation, the central bank has no plans to cut rates to stimulate the economy; initially, some even anticipated a rate hike. However, Fed Chair Powell indicated this week that a hike is unnecessary, as short-term oil price volatility is not typically factored into long-term inflation assessments, and long-term inflation expectations remain stable. Broad-Based Price Increases Across Industries The US economy is highly dependent on consumption, which accounts for nearly two-thirds of economic activity; consumer spending directly dictates economic direction. Vanderbilt added that compared to the 1970s oil crisis, the US now relies less on crude imports, providing some buffer, but it will only slightly cushion the impact. Herman Nieuwoudt, President of Energy Resources at International Financial Systems, stated unequivocally: "Every industry that uses fuel will face persistent, accumulating cost pressures, and almost no sector will be spared." He emphasized this isn't a one-time shock: "This is the most severe energy supply disruption in modern history, compounded by six years of structural volatility in the industry. Price increases will gradually pass through to manufacturing, packaging, agriculture, logistics, and retail, with the full negative impact becoming apparent only after several months." Businesses that can anticipate risks, adjust operations in real-time, and manage funds flexibly will navigate the crisis smoothly; those that simply add surcharges without improving efficiency will struggle to survive and be forced to adapt within a few quarters. For consumers, feeling the pinch at the pump is just the beginning: prices for airfare, groceries, shipping, and industrial goods will all rise subsequently. Economists indicate that the already divided K-shaped economy will worsen: essential industries like airlines and auto repair, and giants like JetBlue and Amazon, have ample room to raise prices; meanwhile, SMEs and non-essential service providers are trapped—raising prices loses customers, not raising prices erodes profits. Airfare increases were already expected. Delta Air Lines CEO Ed Bastian revealed weeks ago that strong travel demand provides justification for fare hikes as oil prices rise. "Even if the conflict continues, our bookings and revenue are still up 25% year-over-year." United Airlines CEO Scott Kirby also acknowledged in early March that price increases are inevitable to cover fuel costs. Federico Bandi, an economics professor at Johns Hopkins Carey Business School, said: "American consumers are resilient, but this crisis is still severe." While the airline industry can rely on essential demand to justify hikes, other sectors lack that confidence. Bandi observed that consumer spending is shifting from non-essential to essential categories, and within essentials, towards cheaper generic brands over name brands. "Businesses cannot sustain passing massive energy costs to consumers indefinitely. When oil prices eventually fall, whether companies lower prices accordingly will directly influence consumer confidence and choices." Fernando Lozano, an economics professor at Pomona College, added that issues like tariffs, government shutdowns, and rising healthcare costs have already exhausted public patience; the addition of various surcharges now faces strong consumer resistance. The logistics industry faces a severe test: consumers will have to choose between "expensive, fast delivery" and "cheaper, delayed receipt." Josh Stanitz, Chief Strategy Officer at logistics software firm Octane, stated plainly: "The era of free, fast shipping is ending. This crisis is forcing the industry to restructure; logistics will return to a model where you pay for speed and value." Both merchants and consumers are now confronting the true cost of home delivery. The US Postal Service has also announced an 8% surcharge on packages and priority mail. Stanitz termed fuel surcharges a "volatility tax" on logistics: "Large firms use these fees to hedge against oil price risks; but for small businesses, it's an unavoidable extra cost per order. For big companies, it's a risk buffer; for small merchants, it's a direct, hard loss." Ultimately, both businesses and consumers are caught in a dilemma. Friedman recalled starting his moving company with an old truck during the Great Recession, persevering through sheer effort. Now, with a fleet of 2,000 trucks to fuel, there is no flexibility to adjust profits or pricing—a stark contrast to the past. "Right now, every American is feeling the pressure."