Teaching Iran a Lesson
I subscribe to a Dean Baker site. Typically, he is on the economic side of information. This commentary has a little bit of both economics and politics. What to do with Iran when the president is Trump. The rest of the world teeters economically for every action Trump takes.
“Trump’s Ignorance Could Kill Millions”
Trump is both an incredibly ignorant person and incredibly dishonest person. As a result, when he claims ignorance of an obvious fact it is difficult to tell whether he really is as ignorant as he claims or he’s just lying.
Such is the case with Trump’s claim that he didn’t know Iran might attack its neighbors and close the Strait of Hormuz in response to his joint attack with Israel. Trump insisted that none of the experts thought this possible when in effect just about every expert thought it was both possible and likely.
Given Trump’s ignorance and propensity to lie, it is not easy to know whether Trump actually went to war totally unaware of the most likely consequences, or instead went to war anyhow, deciding that he didn’t care about the damage it would cause. Whatever the real story, the consequences are enormous and sure to get worse as the Strait remains closed longer.
The most immediate and obvious consequence is the higher price for oil and natural gas. People in the United States see this at the gas station, every time they fill their tank. Paying a dollar or so more for a gallon of gas is an annoyance for everyone. It is very bad news for low- and moderate-income households, especially those who need a car for work.
But this is just the beginning of the story. Diesel prices are up by close to $2.00 a gallon. Diesel fuel prices have risen by far more than regular gas because there is more limited refining capacity. This means when some refiners lose access to their supply of oil, their production cannot be easily replaced. Also, there is less ability for users to cut back their demand.
With gas, most people have some ability to cut back the number of trips they take, or to carpool or take public transportation. Most diesel fuel has commercial uses like trucking. There is not much ability to cut back unless fewer goods are transported.
The higher price for diesel fuel will be a big hit to independent truckers and trucking companies, who will end up with lower income as a result. And in most cases, they will look to pass on much of the higher fuel cost to their customers, who will eventually pass it on as higher prices to consumers.
There is a similar story with other commercial transportation. Many travelers are already seeing this in higher airplane prices and fewer flights.
But whatever the costs in the United States, they are far higher elsewhere. Jet fuel is in more limited supply in Europe, since they import a large share of what they use. East Asia is also being hard hit by higher gas and fuel prices, since countries like Japan and South Korea import most of their fossil fuels, and most of it comes from the Middle East.
But the worst story is in the developing world, especially Sub-Saharan Africa. Tens of millions of people in the countries of the region were already living at the edge. Higher prices for oil could mean many can no longer afford kerosene for cooking. And the cost of transporting food and other necessities could be too high for the countries to bear.
And fossil fuels are only part of the problem. Close to 30% of the world’s fertilizer supply passes through the Strait of Hormuz. As a result of the blockage, fertilizer prices have also soared since the start of the war. Already, 70% of farmers in the United States report cutting back fertilizer usage due to price increases. That number will increase if the closure persists and prices go still higher.
But as bad as the story is here, it is much worse in the developing world, where farmers will be much less capable of coping with higher fertilizer prices. Many may be forced to do without fertilizer altogether, causing crop yields to plummet. This could put millions of struggling farmers out of business.
And the result of lower crop yields in both developing countries and the United States will be higher food prices for the world. This will cause an increase in hunger and malnutrition for tens of millions of people.
The point here is that it is entirely possible, perhaps likely, that millions of people will die because of a totally foreseeable consequence of Donald Trump’s war that he claims he never even considered. I guess this is consistent with Secretary of Defense Pete Hegseth’s pursuit of “lethality.”