Will the US port strike raise gas prices? What you need to know

Dockworkers go on strike at East & Gulf Coast ports

Unionized dockworkers on the East and Gulf Coast ports went on strike Tuesday. Negotiations between the ILA and USMX have been deadlocked over the union's demands related to wage hikes as well as compensation.

LOS ANGELES - A union dockworkers strike that began at dozens of U.S. ports on Tuesday has raised concerns about potential disruptions to various industries, including oil and gas.

However, the Department of Energy (DOE) has assured the public that crude oil, gasoline, and other liquid fuel exports and imports are not immediately impacted. Other workers handle these operations, meaning there is no immediate risk to fuel supplies or prices.

However, experts caution that while the oil and gas industry may not see immediate disruptions, this could change if the strike lasts for an extended period.

The longer the strike continues, the more likely it will disrupt the supply chain, which is essential for transporting oil and gas products. As Adam Ferrari, CEO of Phoenix Capital Group, explained in a recent FOX Business interview, disruptions could eventually lead to shortages, causing price hikes at the consumer level.

"This is a domino effect," Ferrari said. "Increased gas prices could also lead to fluctuations in stock prices and investor and market uncertainty. In turn, it could also impact government regulation and policies, of which already have existing tensions within this sector."

How does the strike impact oil and gas transportation?

While the oil tankers and natural gas products are not directly affected by the current strike, the broader impact on the shipping industry could have a knock-on effect.

The East and Gulf Coast ports account for about half of all U.S. container imports, meaning the prolonged disruption could affect the overall supply chain.

As Phil Flynn, an energy market analyst, pointed out, the strike could reduce the demand for oil as factories may shut down if the strike extends, further dampening overall oil demand.

"Oil tankers and LNG will not be impacted as the Longshoremen strike is impacting container ships, but when those ships don’t move they will not burn oil," Flynn wrote. "The possibility that factories may shut down because of the strike will also reduce demand for oil and could lead to a larger U.S. recession, further hampering demand."

What happens if the strike continues?

If the strike persists, industries across the board will feel the impact. The oil and gas industry could face increased prices as supply chains become more strained, especially for natural gas products that rely on labor for loading and unloading.

Ferrari noted that this would not only affect gas prices but could also lead to fluctuations in stock prices and market uncertainty, which would ripple through to government regulations.

President Biden has not yet intervened, despite calls from trade groups like the National Retail Federation and the U.S. Chamber of Commerce to use his authority under the Taft-Hartley Act to force the ports to resume operations. As the strike progresses, experts like Patrick Anderson from Anderson Economic Group predict that the economic toll will rise, potentially costing the U.S. economy billions of dollars each day.