Mahsa B retweetledi
Iran Math Camp
Obviously the Iran war and the disruption of Iran’s global terror network seems to have come down to fear of energy prices. Perhaps FDR’s famous line would now be “we have nothing to fear but fear of oil prices.”
So let’s do the math. We use 20 million barrels of oil a day. So if oil prices increased during the war to $110 a barrel that is an extra $1 billion a day in costs. So 60 or 90 days of conflict adds about 60 to 90 billion in costs in a 29 trillion dollar economy. About 70 per cent of that is domestically produced so 70 per cent of it stays in the US economy. It just shifts from one sector to the other.
In comparison, Trump took in 260 billion in tariff revenues last year and all of the fears of it were overblown as that amounted to only 1 per cent of the economy. The impact here of even a 4 or 6 month conflict (and there’s no indication it will go on that long) are much less than last year’s tariffs. Oil was over $100 for 3.5 years of Obam’s term without daily headlines.
Now once again the fed zigs when it should zag. Higher energy prices from a war are a drag on the economy as a result of blockades and they should cut rates to keep it strong. They instead once again do the opposite. They are a much bigger factor here if they would cut rates to lower costs.
Imagine for a second how much the world will save in military and human costs once the greatest sponsor of global terror falls or is contained. This is a regime that gunned down thousands of unarmed protesters while diverting all its resources to missiles and nuclear weapons and their aims remain regional domination and beyond.
Net net the math shows that once again the impacts, while absolutely real, are way overblown. The Iranians are playing to our fears and only once we realize that the benefit of removing their stranglehold on the Mideast is worth trillions in the long term can we put our fears in perspective. Once we overcome them, Iran’s principal remaining source of power on the West collapses.
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