Indiana especially vulnerable to oil prices INDIANAPOLIS (WISH) — A Ball State University economist said the economic impact of the war with Iran will persist even if the war ends soon. Iranian forces have continued to block the Strait of Hormuz, the narrow waterway separating Iran from Oma n and the United Arab Emirates that is the sole path into the Persian Gulf. About 20% of the world’s oil exports are shipped through the strait. In an interview with News 8 for Sunday’s “All INdiana Politics,” Michael Hicks, director of the Center for Business and Economic Research at the university in Muncie, said oil is a worldwide commodity. Even though the United States produced 22% of the world’s oil in 2025, according to the Energy Information Administration, Hicks said the overall global supply of oil is now constricted. “It’s like a big, global bathtub,” he said. “If the level of the bathtub drops, that affects everywhere in the world, not just in the countries that may be more dependent on imports from Iran or Saudi Arabia or Kuwait.” Hicks, an Army veteran who served in the Gulf War, said the strait is narrow enough that Iranian ground forces can hit ships using guided ground-launched missiles or small drones. He said even if Iran only hits a few tankers, the risk is great enough that shipping companies won’t want to risk their cargoes or their crews. Hicks said Indiana is more sensitive to oil price shocks than other states because it is one of the highest-commuting states in the country. He said Hoosiers driver farther on their commutes than most other Americans. In addition, he said Indiana’s manufacturing-intensive economy could take a hit if demand for new cars drops. Hicks said although Indiana’s gas tax does add to prices at the pump, it’s a small effect. He said the sales tax levied on gasoline amounts to about 7 cents for each additional dollar per gallon. If shipping through the Strait of Hormuz remains constricted, Hicks said, oil prices will lead to higher prices for other consumer goods. “I always ask my Intro (to Economics) students to tell me what products that you can buy that are not affected by gasoline prices. Nobody’s ever been able to come up with one,” he said. “(Diesel) is going to affect the cost of goods being shipped on top of the tariffs that we’re already experiencing. Airplane flights are going to go up astronomically. The costs of fuel are a major part of their costs.” Even if the war ends within the next few days, Hicks said, oil prices would remain high for several weeks or months and overall price impacts on consumers would last through at least the middle of summer. President Donald Trump has pushed Middle Eastern countries to increase their oil output to counter the effects of Iran’s efforts in the strait. Hicks said that won’t make any difference because much of the oil still has to go through the strait. Moreover, he said it takes months or years to increase oil production, including in the United States. “All INdiana Politics” airs at 9:30 a.m. Sunday on WISH-TV. ...read more read less