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Will The Nuclear Deal With Iran Improve Prices At The Pump?

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Gas Prices
Rick Bowmer/Associated Press

The price at the pump could go down because of the deal with Iran announced this week.

On Tuesday, the United States and international partners struck a landmark nuclear deal with Iran.

Under the deal, Iran must scale back its nuclear program in return for sanctions against it being lifted. 

The deal allows Iran to start selling oil to the United States for the first time in 20 years.

It could mean prices at the gas pumps in Las Vegas could go down.

However, before you change out your Prius for an SUV, Christopher Thornberg, an economist with Beacon Economics in Los Angeles, told KNPR's State of Nevada that it could be several years before we see a price change.

"The Iranian oil industry has suffered," Thornberg pointed out, "They need new investment."

Thornberg said it could be two to three years before there would be a benefit, but even then the drop in prices would only be temporary.

"Maybe a short burst but then prices will probably go back up to where they're sitting right now," Thornberg said.

Since fracking technology allowed the United States to double its oil output the price of oil has dropped but when that happened, Thornberg explained, new oil exploration slowed.

He said the same thing would happen if there was a surge in production from Iran.

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Plus, even if there is a glut of oil on the international market, it doesn't mean there is a drop in gasoline prices. Refining the oil into gasoline can push the prices we pay per gallon up.

Guests

Christopher Thornberg, economist, Beacon Economics

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