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Juan Cole for Informed Comment
Trump has reportedly told aides that he wants to end the Iran War within four to six weeks and that he has realized that attempting forcibly to reopen it would take far longer.
Having degraded Iran’s military capabilities, Trump hopes that future diplomacy will help reopen the Strait and that other countries will take the lead on those negotiations (!)
If wishes were fishes we’d all have barrels full.
Meanwhile, Secretary of State Marco Rubio gave an interview to Al Jazeera in which he said,
“We have very clear objectives that we’re trying to achieve here. Those objectives are the destruction of their air force, which has been achieved; the destruction of their navy, which has largely been achieved; [and] a significant reduction in the number of missile launchers that they have, which we’re well on our way to achieving.”
It isn’t clear that Rubio is in the loop on Trump’s war aims, and Trump himself appears to say things so as to move the stock market and enable insider trading for himself and his cronies, so it is hard to know what emphasis to place on these bipolar pronouncements. On Sunday Trump was blustering about invading Iran with ground troops or destroying all its power and desalinization plants. Now on Monday evening he want to cease bombing in a few weeks and walk away.
Rubio’s three goals are silly. Iran has never had much of an air force or navy. And while its ballistic missile launchers have been reduced in number, the country still seems to have large numbers of Shahed drones that can be launched from the back of a Toyota truck or from underground emplacements, and Iran still seems to have lots of these drones. It even still has lots of missiles, and hit an Israeli oil refinery at Haifa with one on Monday. The likelihood is that with Chinese and Russian help Iran will be able swiftly to replace those launchers, and it probably is manufacturing hundreds of new drones a week even as the war drags on.
Iran never had a nuclear weapons program and the 2015 nuclear deal, which Trump destroyed, had guaranteed that Iran’s civilian nuclear enrichment program could not be turned to military purposes. None of the rationales for the war ever made sense, and now the goal seems to be to return to the status quo ante, to get back to February 27, 2026. But you can’t.
The political problem for Trump is that Iran’s strategy of taking the world’s oil and gas hostage has worked. Those fuels are characterized by inelastic demand — people who drive gasoline cars to work need gasoline, whether it costs $2.70 a gallon or $4 a gallon or $7 a gallon. They cannot easily switch to another fuel. I mean, over time they could buy an electric car or move closer to their work, but we’re talking this month and next month. Not only is demand inelastic but supply is, as well.
You’ll hear commentators talking about how America has its own petroleum. This is not true. The US consumes a little over 20 million barrels a day of petroleum and other liquid fuels. It produces 13.6 million barrels a day.
We make up the nearly 7 million barrel a day difference with imports, above all from Canada but also from Mexico, Saudi Arabia, Brazil, Iraq and Colombia.
So although the US may produce more petroleum than any other country, it uses it all itself, and then some. It is not a swing producer. Saudi Arabia is a swing producer because it can produce a lot of oil that it does not use and so can export a lot or a little, having an outsized impact on prices. The US cannot do that. And Saudi Arabia’s exports have been much reduced by Iran’s blockade. What elasticity exists in the oil supply comes from swing producers and Saudi Arabia and Kuwait cannot play that role right now. Supply is therefore inelastic over the short to medium term.
So American’s gasoline and diesel goes up when everybody else’s does, since the producers have a choice of markets to sell into and they will sell to the highest bidder. Americans, contrary to the lies Big Oil tells, are not self-sufficient in gasoline, and their pocketbooks are going to take a big hit on energy prices if this war goes on.
White House photograph of Trump and Air Force One. Public Domain. Via Picryl.
The war has not only taken oil off the market (we won’t be getting any from Iraq since its fields are closed now) but Israeli and US strikes on Iran, and Iranian strikes on the Gulf Arab states, have damaged oil and gas facilities. The French estimate that a third of Gulf refining capacity has been taken off the board because of damage to facilities. Let me fill you in on something: crude petroleum is worthless. It only acquires a value when it is refined into products like gasoline or diesel that can power vehicles or fuel power plants.
That refining capacity is not going to miraculously recover when Trump finally ends this pointless war. Rebuilding will take time. Depending on how long the hot war continues, you could see petroleum stay above $100 a barrel for the foreseeable future, which will take between 0.3% and 0.4% off GDP growth. The US was already anemic at a projected 0.7% GDP growth rate this year, which high petroleum and gas prices could whittle down to nothing. Or we could even go into a recession.
Moreover, the potential is there for more damage to oil rigs, refineries and terminals, and the risk increases with every day the war continues.
Americans haven’t felt the full pain yet because the markets have imperfect information or are paying too much attention to Trump’s jawboning. But industry insiders are worried about $200 a barrel petroleum (it was about $70 before the war), and are worried that elevated prices can be foreseen into the future.
So all of a sudden, as Trump begins to get heat from his MAGA base about gasoline prices and about a costly foreign war and now the prospect of boots on the ground — all of a sudden Trump wants to walk away within a month and let Iran have the Strait of Hormuz until such time as some other countries can talk Tehran out of it!!
Juan Cole is the founder and chief editor of Informed Comment. He is Richard P. Mitchell Distinguished University Professor in the History Department at the University of Michigan He is author of, among many other books, Muhammad: Prophet of Peace amid the Clash of Empires and The Rubaiyat of Omar Khayyam. Follow him on Twitter at @jricole
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