In a time of economic turmoil, President Franklin Roosevelt famously said, “The only thing we have to fear is fear itself,” highlighting how panic can amplify itself in the markets.
If he were here today, he might add something about the real fear being rising oil prices.
These escalating costs play a crucial role in Iran’s strategy for survival. So far, their attempts to develop nuclear weapons have largely failed, and their military capabilities, including missiles, air force, and navy, as well as proxy groups, are in disarray.
For China, the primary survival tactic is convincing the world that it holds the power to shape our economic future and is unbeatable.
Now, let’s dig into the numbers.
The United States consumes around 20 million barrels of oil each day.
We produce approximately 12 million barrels for domestic use and import about 8 million. Interestingly, we also export roughly 11 million barrels because our refineries are specifically equipped to handle certain oil types but not others.
This means the U.S. is actually a net oil exporter, which suggests that an increase in oil prices benefits the economy rather than harming it.
If oil prices were to jump from $60 to $110 a barrel, it could lead to an increase in U.S. energy costs of about $1 billion each day.
A hypothetical 90-day conflict might raise oil prices by $90 billion, yet the negative effects would likely be far less significant than the inflation triggered by former President Trump’s tariffs and President Biden’s expansive spending policies.
Money just shifts within the economy, after all.
That said, rising prices are very real and impact consumers, especially in states that are intentionally increasing prices as part of their environmental strategies. There are various options available to President Trump to pass along these temporary tax hikes to consumers.
Looking back, during Barack Obama’s presidency, U.S. oil prices stayed above $100 a barrel for about three and a half years, and even when Russia invaded Ukraine in early 2022, prices spiked to around $128 without dramatic headlines.
Interestingly, many politicians who are now vocal about price increases have backed policies that were designed to raise prices and tax oil for years.
Meanwhile, preventing Iran from advancing its military and nuclear capabilities could save trillions in long-term costs.
The financial toll of the 9/11 attacks, carried out by just 24 terrorists, is estimated between $3.3 trillion and $8 trillion. Addressing Iran’s threats now, rather than letting them escalate, could save even more.
For nearly half a century, this regime has preached hostility toward America and Israel. Their energy resources have been directed towards military rather than civic needs.
This is a government that has suppressed tens of thousands of its own citizens simply for protesting. It’s unsettling to think about what they could do with advanced intercontinental ballistic missiles.
In summary, the costs associated with a conflict with Iran are far less than the potential benefits. Any temporary rise in oil prices seems overstated and pales in comparison to the advantages of dismantling one of the most dangerous regimes in history.
