Yes. But we likely won't have to. With regard to India, they've actually begun interdiction operations against the Shadow Fleet, so they're actively helping us. Second, with regard to China, we've temporarily de-sanctioned Russian oil so they can get enough, but post-war, that won't matter because Persian Gulf supply will be available. Maybe not Iranian supply, but we'll see.
One other thing worth noting: the Chinese have expressed interest in investing in the new Alaska natural gas pipeline, and Trump keeps pushing them to buy American oil. The more they do that, the more war risk drops, which is positive for everyone except the people in Beijing who really want to invade Taiwan. The thing is, we just gave those people an object lesson too. If closing Hormuz is disruptive, how much more so closing Malacca, Sunda, and Lombok? Because we absolutely can, they absolutely can't stop us, and that would cut off 80% of their imports instantly.
Trump is orchestrating things so as to de-risk the world. If potentially hostile nations are no longer in a position to go to war, the world gets measurably better. And not coincidentally, prices fall too.
Can you clarify how domestic fuel prices will be affected by the US selling more oil abroad? Isn’t that an increase in demand, which is a price driver?
Rod said here and previously that within a year the prices will drop here significantly and be a net longer boon to USA. The short term price spike has actually been less than some gulf Hurricanes. I greatly appreciate Rod's wisdom and focus on the future for America. "As risk drops, prices will drop, ultimately quite a lot lower than before the war. Consumers will find relief while U.S. market share soars. "
We're just going to expand production (and related infrastructure: pipelines, refineries, etc.). We have nearly tripled production since 2010, and if you saw my Deep Dive a few months ago on "America's New Shale Revolution", you'll recall that we just had a big technological breakthrough that will significantly increase the amount we can produce per well.
So prices will come down once the war is over, but U.S. market share will have significantly increased. That means more jobs, more investment, more dividends to the pension funds that own so much of America's public companies, more security for allies who have heretofore been dependent on Russian and Middle Eastern supply, and as a result of that last bit, lower operating costs for the U.S. Navy (or at least shifted costs, as we move more from the Persian Gulf and to the Western Pacific).
Finally, don't forget: in 2008, we sent $700 billion to our enemies for energy. Today we buy our own (plus a little from Canada and Venezuela) and we're the third largest global exporter pre-war (first largest exporter of refined product). So we've completely reversed that massive outflow from the U.S. economy, and that's good for everybody...except our enemies.
the US consumes 20 million bbls/day yet produces only 13.5 million bbls/day, so the more we sell the more we have to buy - seems like a wash at the macro level
Not at all, because you're ignoring the discounts we get on Albertan and Venezuelan crude, not to mention that we have most of the refineries that are optimized for both.
“We are monetizing the reduction of risk and the displacement of risky supply.” Classic Trump move…negotiating with and capitalizing on the heart of the matter: risk.
Exciting view of the present situation and the future. I pray that it all comes to pass. Unfortunately, this is hard to explain to my doomsday denier friends and family - to be clear, though, I have friends and family on each side of this issue.
Maybe you should ask them why they weren't saying much when oil was $50/bbl higher under Biden. Or when we were paying our enemies $700 billion per year for oil we now produce.
It strikes me that underlying this entire analysis is the belief that we have the ability to dictate terms across the board. That’s a heroic assumption and the entire argument crumbles if it doesn’t hold. As usual time will tell.
Time will tell. Ukraine has demonstrated that capital ships are shockingly vulnerable to missiles even when they do not come close to the level of China’s anti-ship missiles. Admittedly our submarines are very lethal and non-vulnerable platforms. But is the juice worth the squeeze?
Well, RUSSIAN capital ships that have been sitting around rusting since the 1980s. I'm not minimizing the threat. I'm simply saying that the U.S. Navy is not minimizing the threat.
As to our submarines, I've written a lot about our need to greatly expand their numbers. That's one of the more interesting features of Trump's trade deal with South Korea: it directly results in the expansion of our submarine construction capacity by about 50%. Kind of a big deal.
Such a fantastically naive reportage. In gathering opinion from the very large world around our island, do you really understand the global implications of attempting to force the world to bend its knee to us after the repeated disasters of our failed diplomacy and the president’s continued insults to the world ? Look to massive boycotts of our exports and mounting political backlash . Look sadly to major conflict in the straights as well as we attempt to protect these football field + tankers from the abundance of missles still in Iran’s possesion.
It’s not the idea of constricting the flow of oil : it’s the fact that trump et all seem to be obsessed with American along against the rest of the very much larger globe that is as naive as it is arrogant . We need to think like adults not drunk cowboys . It’s not a movie set.
Aren't you one of the guys who said "we can't drill our way out of this crisis", right before we nearly tripled U.S. production, eclipsing Russia and Saudi Arabia combined, and becoming a top-three exporter?
So I'll bet you haven't considered who controls every chokepoint worth mentioning on the planet either.
Still waiting for the 12 Day War to become "WORLD WAR III!!!!!!"
To quote the author, “America is no longer willing to subsidize a global order in which others consume the benefits, obstruct the guarantor, and then sneer at the one country that keeps the whole system alive.”
Interesting. I read that we were specifically interdicting ships to and from Iran, but that other Gulf states were allowed free transit. Given those states’ (sometimes tacit) support for the attack on Iran, that would make more sense than a complete blockade. Is that your understanding?
Complete blockade for now. We have work to do to clear the Strait of mines, in part for general security and in part because we're now underwriting maritime insurance. So reducing the risk is important both militarily and financially.
Once that's done (and it's not our top priority, for reasons I've elaborated on elsewhere), we will open the Strait to everyone except Iran. And hopefully, to a new free Iran as well soon.
Along with most of the world, NZ is struggling to deal with the economic effects of a war started by Trump.
If I am to believe the writer, it will all end well and that would make Trump the greatest military strategist the world has seen. How likely is that?
Given that he has just portrayed himself as Christ healing the sick-psychiatric wards are full of people with that delusion-I think it more likely that he is mentally unstable.
1. I never said Trump is "the greatest military strategist the world has ever seen", so that straw man doesn't work for you.
2. People like you have been calling him mentally unstable for the last ten years while he made fools of you.
3. Iran started this war 47 years ago. You've been paying a $10 to $20 risk premium for your oil for all that time thanks to Iran's unending threats to close the Strait, and you didn't care. You only care when someone does something to end the racket. Typical.
The old binary is obsolete. The choice is no longer between doing nothing and forever wars. There is now a third path: decapitate command, destroy the coercive architecture, pit factions against each other, degrade local enforcers, and create the conditions in which the people themselves become the decisive “boots on the ground.”
And if people understood the implications of the robots we're seeing in frontline combat in Ukraine, they'd be absolutely freaked out. Add in where lasers already are, and will be in ten years. The world is changing fast.
It's so cute watching you guys spin while he makes you look dumb.
You forget that you don't get to curse on my wall. Banned.
The Shadow Fleet carrying illegal, sanctioned oil, much of it from Russia but also all of Iran's and most of Venezuela's (until recently).
Yes. But we likely won't have to. With regard to India, they've actually begun interdiction operations against the Shadow Fleet, so they're actively helping us. Second, with regard to China, we've temporarily de-sanctioned Russian oil so they can get enough, but post-war, that won't matter because Persian Gulf supply will be available. Maybe not Iranian supply, but we'll see.
One other thing worth noting: the Chinese have expressed interest in investing in the new Alaska natural gas pipeline, and Trump keeps pushing them to buy American oil. The more they do that, the more war risk drops, which is positive for everyone except the people in Beijing who really want to invade Taiwan. The thing is, we just gave those people an object lesson too. If closing Hormuz is disruptive, how much more so closing Malacca, Sunda, and Lombok? Because we absolutely can, they absolutely can't stop us, and that would cut off 80% of their imports instantly.
Trump is orchestrating things so as to de-risk the world. If potentially hostile nations are no longer in a position to go to war, the world gets measurably better. And not coincidentally, prices fall too.
Can you clarify how domestic fuel prices will be affected by the US selling more oil abroad? Isn’t that an increase in demand, which is a price driver?
Rod said here and previously that within a year the prices will drop here significantly and be a net longer boon to USA. The short term price spike has actually been less than some gulf Hurricanes. I greatly appreciate Rod's wisdom and focus on the future for America. "As risk drops, prices will drop, ultimately quite a lot lower than before the war. Consumers will find relief while U.S. market share soars. "
I’ve been following Rod for a while now and I, too, appreciate his wisdom. This doesn’t answer my question though.
We're just going to expand production (and related infrastructure: pipelines, refineries, etc.). We have nearly tripled production since 2010, and if you saw my Deep Dive a few months ago on "America's New Shale Revolution", you'll recall that we just had a big technological breakthrough that will significantly increase the amount we can produce per well.
So prices will come down once the war is over, but U.S. market share will have significantly increased. That means more jobs, more investment, more dividends to the pension funds that own so much of America's public companies, more security for allies who have heretofore been dependent on Russian and Middle Eastern supply, and as a result of that last bit, lower operating costs for the U.S. Navy (or at least shifted costs, as we move more from the Persian Gulf and to the Western Pacific).
Finally, don't forget: in 2008, we sent $700 billion to our enemies for energy. Today we buy our own (plus a little from Canada and Venezuela) and we're the third largest global exporter pre-war (first largest exporter of refined product). So we've completely reversed that massive outflow from the U.S. economy, and that's good for everybody...except our enemies.
https://www.rodmartin.org/p/energy-dominance-americas-new-shale
Thanks for this. I haven’t read the Shale article, but I will!
the US consumes 20 million bbls/day yet produces only 13.5 million bbls/day, so the more we sell the more we have to buy - seems like a wash at the macro level
Not at all, because you're ignoring the discounts we get on Albertan and Venezuelan crude, not to mention that we have most of the refineries that are optimized for both.
“We are monetizing the reduction of risk and the displacement of risky supply.” Classic Trump move…negotiating with and capitalizing on the heart of the matter: risk.
Always.
Interesting take
Exciting view of the present situation and the future. I pray that it all comes to pass. Unfortunately, this is hard to explain to my doomsday denier friends and family - to be clear, though, I have friends and family on each side of this issue.
Maybe you should ask them why they weren't saying much when oil was $50/bbl higher under Biden. Or when we were paying our enemies $700 billion per year for oil we now produce.
Spot-on analysis, deftly summarized!
Thank you!
I'll bet you'd like Jeff Childers writing as well! Look for the Coffee & Covid news on substack!
Great news. Again, information you don't find elsewhere.
It strikes me that underlying this entire analysis is the belief that we have the ability to dictate terms across the board. That’s a heroic assumption and the entire argument crumbles if it doesn’t hold. As usual time will tell.
Compare naval resources and you'll have your answer. The only thing lacking was a President with the will to use them.
Time will tell. Ukraine has demonstrated that capital ships are shockingly vulnerable to missiles even when they do not come close to the level of China’s anti-ship missiles. Admittedly our submarines are very lethal and non-vulnerable platforms. But is the juice worth the squeeze?
Well, RUSSIAN capital ships that have been sitting around rusting since the 1980s. I'm not minimizing the threat. I'm simply saying that the U.S. Navy is not minimizing the threat.
As to our submarines, I've written a lot about our need to greatly expand their numbers. That's one of the more interesting features of Trump's trade deal with South Korea: it directly results in the expansion of our submarine construction capacity by about 50%. Kind of a big deal.
Such a fantastically naive reportage. In gathering opinion from the very large world around our island, do you really understand the global implications of attempting to force the world to bend its knee to us after the repeated disasters of our failed diplomacy and the president’s continued insults to the world ? Look to massive boycotts of our exports and mounting political backlash . Look sadly to major conflict in the straights as well as we attempt to protect these football field + tankers from the abundance of missles still in Iran’s possesion.
It’s not the idea of constricting the flow of oil : it’s the fact that trump et all seem to be obsessed with American along against the rest of the very much larger globe that is as naive as it is arrogant . We need to think like adults not drunk cowboys . It’s not a movie set.
Aren't you one of the guys who said "we can't drill our way out of this crisis", right before we nearly tripled U.S. production, eclipsing Russia and Saudi Arabia combined, and becoming a top-three exporter?
So I'll bet you haven't considered who controls every chokepoint worth mentioning on the planet either.
Still waiting for the 12 Day War to become "WORLD WAR III!!!!!!"
So death to America and financing terrorism globally is good?..moron
To quote the author, “America is no longer willing to subsidize a global order in which others consume the benefits, obstruct the guarantor, and then sneer at the one country that keeps the whole system alive.”
And why should we?
Slop from a bot.
Interesting. I read that we were specifically interdicting ships to and from Iran, but that other Gulf states were allowed free transit. Given those states’ (sometimes tacit) support for the attack on Iran, that would make more sense than a complete blockade. Is that your understanding?
Complete blockade for now. We have work to do to clear the Strait of mines, in part for general security and in part because we're now underwriting maritime insurance. So reducing the risk is important both militarily and financially.
Once that's done (and it's not our top priority, for reasons I've elaborated on elsewhere), we will open the Strait to everyone except Iran. And hopefully, to a new free Iran as well soon.
Got it, thanks.
Excellent article ….thanku
Amazing article. Thank you. I can only hope every sentence you wrote is true and every prediction comes to pass
This is a banger of an article. I'm struggling to choose what to quote in my restack.
Thanks!
Along with most of the world, NZ is struggling to deal with the economic effects of a war started by Trump.
If I am to believe the writer, it will all end well and that would make Trump the greatest military strategist the world has seen. How likely is that?
Given that he has just portrayed himself as Christ healing the sick-psychiatric wards are full of people with that delusion-I think it more likely that he is mentally unstable.
We will see.
1. I never said Trump is "the greatest military strategist the world has ever seen", so that straw man doesn't work for you.
2. People like you have been calling him mentally unstable for the last ten years while he made fools of you.
3. Iran started this war 47 years ago. You've been paying a $10 to $20 risk premium for your oil for all that time thanks to Iran's unending threats to close the Strait, and you didn't care. You only care when someone does something to end the racket. Typical.
Wow. You managed to get Iranian AND Soviet propaganda into that one! Congratulations! You're pretty much an enemy of humanity.
The old binary is obsolete. The choice is no longer between doing nothing and forever wars. There is now a third path: decapitate command, destroy the coercive architecture, pit factions against each other, degrade local enforcers, and create the conditions in which the people themselves become the decisive “boots on the ground.”
And if people understood the implications of the robots we're seeing in frontline combat in Ukraine, they'd be absolutely freaked out. Add in where lasers already are, and will be in ten years. The world is changing fast.
Elon sees ahead as well, and plans for inventions that will further our control and security into space.
The young laser genius building the 5 million sq ft laser fab in Ohio (ex-Oculus) fortifies us as well.