The Iran war and the global economy

 

The Iran war isn't (yet) having a major impact on the US economy.  Gas prices are up, but not out of control, and since we're self-sufficient in most sources of energy, we're in relatively good shape despite the interruption to oil supplies from the Persian Gulf.  However, many other countries are not so fortunate.  A few examples:

• Fishermen in Ireland are grounding their boats because they can’t afford diesel, thanks to rising prices.
• The Philippines has declared a national emergency over the supply of fuel.  Current estimates are that the country has only enough gasoline for the next 53.14 days; diesel, 45.82 days; kerosene, 97.93 days; jet fuel, 38.62 days; fuel oil, 61.49 days; and liquified petroleum gas, 23.51 days.
• Australian gas stations are running out of gasoline and/or diesel.  "As of mid-March, Australia held roughly 38 days' worth of petrol, 30 days of diesel and 30 days of jet fuel."

One might ask why America should be worried about other countries' fuel problems.  The reason is simple:  because their economies are inextricably tied in with ours.  If our trade partners experience serious economic problems, they'll inevitably affect us too in the long run.  CNBC points out:

Energy and commodities market expert John Kilduff of Again Capital ... said “the numbers are just too big ... This is a 10 to 12 million barrel per day deficit. … really just insurmountable. There’s no policy measure that can be taken. There’s no lever that can be pulled to offset this,” he said.

That is why he thinks the timeframe to be focused on is that post-April 1 date. “If there’s no resolution, if there’s no plan, if there’s no sort of even hopefulness that we can get the Strait reopened, with amassing troops or doing whatever the military has to do to do that,” that is when this becomes an energy crisis, Kilduff said. “By mid-year, you will see shortages in places like India, Japan, and South Korea. They will start to rein in industrial production. They’re going to have to conserve to keep the lights on, literally,” he said. If the military and government do not have good answers by April 1, “The crunch is coming.”

There's more at the link.

Speaking of death and dying, John Donne famously wrote:

Therefore, send not to know
For whom the bell tolls,
It tolls for thee.

When the economic bell is tolling, as it is right now, we'll do well to remember that warning.  We, as individuals, can't do anything about the world situation, but we can do something about our own preparations for hard times and our own resources.  The old proverb says, "Look after the pennies, and the dollars will look after themselves."  In the same way, if we look after the practical preparations we can make from day to day, the longer term will tend to resolve itself, and we'll be better off when it does.

Peter