Arthur E. Sowers is a resident of Harbeson.
Please, just read this CNN article title: “Get ready for a 30% jump in heating oil costs this winter as Iran war drives up prices.” Later the same day I saw that article, I saw this CNBC article: “Costco hikes motor oil prices and puts limits on how much members can buy.” The text said purchases were being limited and prices about doubled from about $30 to almost $60.
There is more. This article is on a global commercial energy/business website, Energy News Beat: “Middle East Escalation Meets China’s Return: Dual Chokepoints, Record Tanker Rates, and an Upward Spiral in Crude and Products.” Here is an article on a commercial shipping news website, Seatrade Maritime News: “The perfect storm brewing before winter.” This article is on a major news website in India, called India Today: “Hormuz, Bab el-Mandeb, Suez: The war for the chokepoints that move the world’s oil.” And investingLive cited The Wall Street Journal here: “WSJ: Oil executives warn a global fuel crisis has arrived as Hormuz closure bites.”
To see if any effects from months of Donald Trump’s military war, now converted to and expanded into a larger economic war primarily involving Iran’s six major trading partners, were actually showing up in global trade, I asked the google.com artificial intelligence for a summary answer to this exact question: “Any trends, last few months, negative or reduced expansion GDP, by country.” And here is a quote of the first sentence of the AI reply: “The global economy over the last few months has been characterized by decelerating expansion and pockets of contraction, largely driven by prolonged Middle East geopolitical conflicts, an energy supply shock, and a heavy public debt burden.”
I decided to go deeper on this question by visiting Claude, another AI, and focus on Iran and see what it says about how the situation is getting worse. However, as I was doing this, I noticed this Sept. 11 Associated Press article: “Saudi Arabia shuts down a pipeline as Houthis seize an island, opening a new front in the Iran war.” This is a whole new and complicated expansion of a bad situation. But this Reuters article says there is more shut down than the two straits: “Saudi pipeline outage threatens loss of 4% of global oil supply.” Since the Houthis (enemy of the Saudis) just took over the Strait of Bab el-Mandeb (see the article), they are now in a position to control all maritime traffic (not just oil) going through the Suez Canal in the Red Sea. The Strait of Hormuz carries 25% of the world’s oil, while the Strait of Bab el-Mandeb is in the Suez Canal path. It carries 12%-15% of all maritime traffic (according to Claude). Claude gave me many details beyond the scope of this letter. But Claude explained how Trump is responsible for the increased negative effects on relevant world economies. Otherwise, this means things are going to get worse.
I mention all this because I have seen many articles, like this one from Axios, where many countries have recently started to look doubtfully at the U.S. as a reliable partner because of Trump: “The world reconsiders America.” Moreover, a lot of countries are getting more upset about U.S. dominance of international finance because the U.S. can use “sanctions” by controlling access to the U.S. dollar. As a result, the BRICS (originally Brazil, Russia, India, China and South Africa but now with 21 member countries) want to replace the dollar to escape the reach of U.S. sanctions. The new payment system is called “BRICS Pay” and is in Wikipedia. If that fully develops, then the U.S. will lose a lot of financial power. See this Investing News Network article for a short story on this: “How would a new BRICS currency affect the US dollar?”
Then, we have Trump bullying Canada. And you can see that Canada is not only mad about this but is not giving in, either, according to this CBC story: “Canada has leverage in this trade fight, but economists warn it comes with a cost.”
Lastly, we may be headed for a bad global economic downturn. It is not generally appreciated, but the 1930s “Great Depression” was worldwide and had almost nothing to do with the 1929 crash simply because the world was already entering a downturn. This was well explained in Charles Kindleberger’s book, which is discussed in this Centre for Economic Policy article: “New preface to Charles Kindleberger, The World in Depression 1929-1939.” But, to give credit to all the theories, you need to read the comprehensive Wikipedia article “Great Depression,” which, in the introduction — unfortunately — misrepresents the contribution from the 1929 crash.
Many economies in the world are now pretty shaky or worse. Uncertainty can lead to panic cutbacks in spending. And Trump’s impulsiveness, erratic and knee-jerk thinking, and unwise decision-making is just the opposite of what we really need.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
