How to Survive High Oil Prices After the Iran Bombing

Due to the US and Israeli bombing of Iran, oil prices rose to $120 per barrel (WTI crude). If the Straits of Hormuz are completely closed, maybe oil prices could go to $150+ a barrel. This will create a huge tax burden on consumers everywhere.

And with the rising cost of living, survival has become increasingly difficult for all but the wealthy. Maybe the world will be safer in time, but in the long run, simply keeping your head above water may be in order.

Meanwhile, if you’re an investor, your stock portfolio could also take a hit for who knows how long. Perhaps the S&P 500 falls another 15%, as it did in early April 2025 as the war winds down. Or maybe we bounce around the 200-day moving average of 6,600 before going higher again.

Repairs are always a good reminder about the importance of proper asset allocation. Personally, I bought dip for my kids, but that’s a topic for another post.

Now let’s talk about surviving high oil prices. Because maybe it’s easier than we think.

How I Plan to Survive High Oil Prices

My survival plan for high oil prices is exactly the same as my survival plan for high food prices during a crisis.

Count.

Reduce.

Replace it.

By calculating, reducing, and substituting, I was able to keep food costs relatively low over the course of two years while losing 10 pounds in the process. Never waste a hard time.

Calculating the Cost of Rising Oil Prices

My first step is to calculate how much my oil consumption costs each month. Oil is an input cost for many things, but especially, gasoline.

Here in San Francisco, the price of a gallon of regular unleaded will likely rise to more than $5 if oil stays above $100 per barrel. So, filling my 27 gallon tank would cost about $135. Before the bombing of Iran, gas was close to $4.50 per gallon. So, my cost increase is about $14 per visit.

I fill my tank three to four times a month, which means I will pay until $55 more per month for gas.

Thankfully, I’ve already cut the cable, which saves me $120 a month. That leaves me with a monthly buffer of $65, despite rising gas prices.

Reducing Consumption to Fight Costs

Let’s set aside my first measure to reduce the cost of eliminating cable. To offset my $55 increase in monthly gas costs, an easy solution is to simply drive 15% less.

I’ve only been driving about 6,500 miles a year on average for the past decade, so there’s not that much room to cut. However, every Sunday I drive 40 kilometers round trip to the sports center to teach my children swimming and tennis for several hours. About 30 minutes each way, which is a bit of work. But spending 5-7 hours with my kids is also a blessing. We also have lunch and play in between as part of Daddy Day Camp.

However, in times of high gas prices, adjustments can be made. Driving 40 miles requires about 2.5 gallons of gas, or about $12.50 in costs. So, I will complete one of the four weekly visits each month to save $12.50.

Not swimming is hard work, but they will survive a week lost. There are many other things to do and learn.

Replace Expensive Jobs with Cheap Jobs

For one small swimming session a month, I will change this activity by taking the kids to a nearby community playground and teach them tennis and basketball instead. I wanted to work with them on their dribbling and shooting skills, since they are 6 and almost 9.

So what about the remaining $42.50 I need to save to reduce my $55 monthly gas bill?

Well that’s easy. Each time I take my two children to the sports club, I have to pay a visitor fee of $25.50 per child. So, by skipping one week and switching jobs, I saved a total of $63.50.

Now I’m actually $8.50 a month ahead. It’s delicious! The two kid-sized basketballs I bought last month have not been used enough. So the high oil prices have helped me to be less wasteful.

Some Measures to Cut Costs Due to High Oil Prices

After getting the obvious cost savings out of the way, it’s time to reduce the use of the following items that can be very expensive due to high oil prices:

• No flying anywhere until oil prices drop
• Continue to eat a little less than average
• Open the windows when it’s hot and use the air conditioner, while you continue to enjoy the radiant heat
• Don’t buy plastic products, including toys, electronics, household goods, and synthetic clothing
• Skip fertilizing my plants for as long as it takes

I may also suspend the spending freeze on selected items for 30 days, or until oil falls below $80 per barrel for 10 consecutive days, whichever comes later. All savings will be used to invest instead, as I treat investing as an expense.

Must Cope With Temporarily High Oil Prices

The worst case scenario is that oil stays above $100 and reaches $150 for six months. If so, my household will reduce consumption by 10-15% and look for replacements at that time.

The best case scenario is that oil prices average $80 or less in less than a month, when we won’t feel the difference. After eating 10% less for at least a year, it actually felt good to lose weight and look good. I suspect that driving and using less will make us feel better too, like a digital detox with our phones.

Overall, I estimate that a 50% increase in oil will increase our monthly household expenses about $100 – about $55 for gas and $45 for everything else.

We are very frugal, as minimalism and early retirement go hand in hand. As a result, we should be able to withstand these high costs easily. After 16 years of living the FIRE lifestyle, saving money has almost become a hobby.

The biggest problem is seeing our investment portfolio affected, as it is the backbone of generating enough income to stay unemployed and comfortable. I’ve been through a lot of corrections since I started investing in 1996, and I’m always trying to take advantage of my spare cash.

This time is no different.

I wonder if you have calculated how high oil prices will increase your household expenses and what you can do to counter it. Do you think rising oil prices are a big deal?

Track Your Finances to Adjust to Rising Costs

One of the best ways to deal with rising costs is to understand your finances inside and out. When you know the overall value, asset allocation, income generation, and return on investment, it becomes much easier to adjust your spending without feeling stressed.

Track your expenses with Enable free financial tools. Once you connect your accounts, you can track their total value, monitor your portfolio allocation, and better understand your cash flow. The more clarity you have, the easier it is to make smart changes when the economy changes.

I recently went to the post office to drop off a dozen signed copies of my dealer’s USA Today, Millionaire Milestones. If you would like to participate in the promotion, you can read about my experience and instructions at this post.

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