Our Iran Folly Only Accelerates Our Economic Implosion
Oil can make everything really inexpensive - or really expensive.
Cheap, abundant oil lubricates the economy. Gasoline and diesel is cheaper. Which means everything delivered in vehicles running on gasoline and diesel is cheaper. Which is pretty much everything.
When the oil dries up? Everything grinds to a halt. And prices skyrocket.
Well: Ten or so days ago, the Trump Administration unilaterally started a war with Iran.
When not being unilaterally bombed, Iran produces a lot of oil. About 4.5% of the global supply (3.3 million barrels per day of crude - plus 1.3 million bpd of condensate and other liquids).
And Iran controls the Strait of Hormuz. Through which 25% of the world’s seaborne oil trade passes (about 20 million barrels per day).
Well, the US has been unilaterally bombing Iran’s petroleum infrastructure. (And in response, Iran has been bombing regional oil targets.)
So obviously the oil output of Iran - and the wider region - is a little off.
Iran is now also blockading the Strait. So the global oil supply is more than a little off.
Guess what oil prices have done?
Just before the war, oil prices were $70-$75 per barrel. As I type, they are $100-$105 per barrel. This represents a roughly 40-50% increase overall since the war started.
Let us now turn to the US. How much oil do we consume? About 20 million barrels per day.
Which means, conservatively, we are paying $600 million more per day for oil than we were on February 28 - the day we launched the war.
That’s around $18 billion more per month. $216 billion more per year.
And that’s if today’s oil prices - remain the prices going forward. Which we know they won’t.
Because we are being incessantly told “unconditional surrender” is the only war end that will be accepted. (For its part, Iran calls that “A dream you will take to your grave.”)
Want a bad case scenario?
We went for regime change in Afghanistan. Which is a MUCH less sophisticated, fortified and funded country than is Iran. Almost no oil - and what they do have is untapped. Lots of goats and mountains.
Afghanistan’s 2025 GDP? $15.61 billion. Iran’s 2025 GDP? $356.51 billion. So Afghanistan’s GDP is 1/23rd the size of Iran’s.
Afghanistan (251,827 square miles) is 2.5 times smaller than Iran (636,372 square miles). With about half the population (45 million people v Iran’s 93 million).
Well, we spent TWENTY YEARS - and $2.3 trillion - attempting to regime change Afghanistan.
When we got there? The Taliban was in charge.
When we left - two decades later? The Taliban was in charge.
Oh: And we’re still sending the Taliban $2.1 billion per year. At least.
Having learned absolutely nothing from Afghanistan? The US’s Deep State has decided to take on Iran.
In Iran? Twenty years will be only the beginning. With oil prices skyrocketing all along the way. So…gird your loins.
Which brings us back to our economy. Which is today facing an extra $216 billion per annum in oil costs. (And we will soon look back on today - as the good ole days.)
Which, again, will increase the costs of nigh everything everywhere.
Is our economy in spectacular shape? Prepared to absorb the petroleum body blow about to be delivered it?
Not even a little.
The economy added 130,000 jobs in January - but lost 92,000 in February.
And all those jobs numbers will soon be utterly irrelevant….
Microsoft AI Chief Gives It 18 Months - For All White-Collar Work to Be Automated by AI
Excellent news.
Have you heard of “The K-Shaped Economy?”:
“In a K-shaped recovery, different parts of the economy move in opposite directions at the same time following a recession or downturn. One segment - the upper arm of the K - experiences an increase in wealth due to rising asset values or incomes. The lower arm faces increasing financial strain due to declining purchasing power along with stagnating or decreasing wages.
“Together, these diverging paths form the image of a letter K on an economic chart, with one pointing upward, and the other slanting downward.”
The upward-trajectory arm of the K - is Wall Street. The downward-trajectory arm of the K - is Main Street. And it has been trending that way for decades.
In no small part because DC’s Big Government-Big Business cabal spent the last half-century-plus force converting the US into a 70% consumption economy. Which was an exceedingly stupid thing to have done.
It means We the People HAVE to keep spending. HUGE. CONSTANTLY. Or the whole house of (credit) cards comes crashing down.
How are We the Consumers doing?
A Strong Economy Doesn’t Have a Citizenry That Is $18.8 Trillion in Debt
That doesn’t sound good.
But surely we must be spending extravagantly on ridiculous luxuries, right? Not so much….
And having loaded up our credit cards with essentials? We the Consumers have opened yet another debt vein - borrowing directly from retailers. To buy essentials.
We the Consumers can’t even afford groceries. And now EVERYTHING is going to be dramatically more expensive - thanks to our Iran folly.
Now let’s turn back to our government.
We’ve already spent about $9.5 billion on the Iran war. About $1 billion per day.
And we ain’t seen nothing yet. Wait until boots start hitting the ground.
Is our government in spectacular economic shape? Prepared to absorb the Iran war body blow already being delivered it?
Not even a little.
The Road to $40 Trillion in Debt
Federal Deficits and Debt Will Worsen Over Next Decade
Medicare and Social Security Face $175 Trillion Shortfall
In case you were wondering? The combined debt and Medicare-Social Security shortfall - kills the country. All by itself.
Forget about ALL the other problems the nation faces. That alone is the ball game.
So it’s a good thing we’ve unilaterally started a war against a major oil producer.
In THE major oil producing region.
Because that will really grease the skids to extinction.
Well, “chicken little,” keep hollering the sky is falling. Maybe it will. Or maybe this slight inconvenience will be over very soon. And WE win.