Growing tensions over the attack on Iran by the U.S. and Israel have added to economic uncertainty, from the obstruction of global oil supplies to the disruption of travel as airports shut down due to the threat of counterattacks. Amid this uncertainty, it remains to be seen how Hawaiʻi’s economy will be affected.
The University of Hawaiʻi Economic Research Organization released its local forecast report on Friday, and HPR spoke to UHERO Executive Director Carl Bonham on Monday to learn more about the fuel issues. Hawaiʻi does get some oil from Libya, which traverses through the Strait of Hormuz, where all shipments have been halted.
Interview Highlights
On the possible impact on fuel prices
CARL BONHAM: If gasoline prices go up 50 cents a gallon, consumer confidence is going to go down, and it does have knock-on effects on the overall economy, because people are basically putting gasoline in their car first, and cutting back somewhere else. But the overall impact on the U.S. economy and on Hawaiʻi's economy from oil price shocks is much, much more muted than it has been in the past, just because we're so much more efficient. You know, the average car is going to get much, much higher miles per gallon than it did 40 years ago. So there's obviously still a real connection, and the wild card is just how long these disruptions go on. If we're talking about, you know, major destruction of oil-producing or all shipping capacity in the Middle East, that's something that, you know, it's going to have an impact for a long period of time, versus just closing the Strait of Hormuz. That can be reversed right, almost immediately.
On cascading effects on tourism
BONHAM: If you have a one-week disruption of energy and it drives oil prices up a little bit, maybe it drives airfares up a little bit for a very short period of time. That's not something that, you know, we're really going to see it in the data. And the other thing that from past experience we know is that if you end up in military conflict and risk of terrorism, etc., that influences people's travel decisions. And in some cases, it means our visitors from Japan choose not to come. On the other hand, visitors from the U.S. might be choosing not to make that trip to, let's say, Egypt or someplace in Europe, and they might just choose to stay closer to home, and we could see a boost from that kind of travel. But as you mentioned, there's so much unknown about the current situation that really all we can really say is it's created more uncertainty when we didn't need it.
On best vs. worst-case scenarios
BONHAM: The wild card is no one knows how long or how severe the war is going to get, and the sort of best-case scenario is this is over in a week, and the impacts on oil-producing regions, oil-exporting regions, are short and minimal. That's the best-case scenario from an economic perspective. Obviously, there's still very serious impacts on people, loss of life, etc. And then the worst-case scenario is a major disruption, a major impact on, say, the destruction of oil-producing capacity or exporting capacity that lingers. It can take a very, very long time to repair a producing facility or a ship facility. Then that's enough to lead to higher inflation, lead to higher gasoline prices for an extended period of time.
Anything else on your radar?
BONHAM: Obviously, it's very worrisome. I would encourage people not to overreact, because there's so much we don't know. And if this war, this, I don't know what to call it, if it's all over in two weeks' time, the impacts on our pocketbooks are going to be pretty minimal. So really, all we can do is wait, watch and plan for scenarios, plan for what ifs, and cross our fingers. Hope for the best. Hope that this ends very quickly.
This story aired on The Conversation on March 2, 2026. The Conversation airs weekdays at 11 a.m. Jinwook Lee adapted this story for the web.
