The Strait of Hormuz is the problem (logistics menace for the midterm elections)

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SEAN SPICER
https://youtu.be/2Dzn0r0A0qA

VIDEO EXCERPTS: Well, the numbers definitely show an uptick in inflation, and that is due, as you rightly pointed out, primarily to higher energy prices -- gas, diesel, jet fuel, right? And this, of course, is all stemming from the Iran War. None of this was an issue before the Iran War. Energy prices were extraordinarily low.

[...] And this is part of the reason why as an economist I look at something like the Iran War as a bit of a tragedy, because I saw that looking at supply chain data, looking at input prices, a lot of consumer prices were actually set to not just stop increasing but to start declining late in the summer into the fall and even into the early winter of this year.

And now unfortunately with higher energy prices, that's all going to be reversed. So when we look at the inflationary forecast right now, Sean, we're not only seeing elevated inflation today due directly to energy prices, but we're also looking at those higher energy prices kind of trickling down throughout the rest of the economy and increasing a lot of other consumer prices in the coming months.

[...] If the Strait of Hormuz were to open today and you had oil start to flow in the coming days, it'll take weeks, sometimes more than a month, for that oil to get from the Persian Gulf to different ports.

[...] That means all of those maintenance needs are going to catch up when they finally do actually open the Strait and get the oil flowing again. So this all translates into higher prices in the future.

In other words, as one shock goes away, it's going to more or less be replaced by another shock. So it's going to take many, many months, even after the Strait opens, until I think we get back to anything resembling normal.

[...] Like how big of a problem is the Strait of Hormuz in this equation?

[...] It is the problem, Sean. ... But you know, Sean, it's not just oil. There are all these byproducts of oil and natural gas that come out of the drilling and production process, etc. That people are not talking very much about, and they're things that we don't have critical reserves for. ... Helium as one of them. There are worries about things like sulfuric acid, and the list goes on and on.

[...] We're getting increasingly worried about different things in the chemical industry, different blend stocks to make all kinds of plastics. So, it's not just a matter of the oil itself that's getting impacted here, but the longer this goes on for, the more we're looking at severely negative impacts in other industries as well.

[...] The big thing to I think recognize here, Sean, is the fact that yes, the AI data centers represent a big increase in the demand for electricity, but we have to look at what's been happening to the supply side of that equation.

[...] So it's not so much a question of what are these data centers doing to the price of electricity. It's what's going on with our supply side. Look at all of our major competitors around the world. Economies like India's and economies like China's are building coal plants. They are just going gangbusters. They're adding nuclear. They're doing natural gas. They're doing it all. And what are we doing here? We're hamstringing ourselves with unreliable green energy...

The Strait is the problem ... https://youtu.be/2Dzn0r0A0qA

https://www.youtube-nocookie.com/embed/2Dzn0r0A0qA

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Massive global energy crunch coming soon
https://youtu.be/312_GNWSs7k

VIDEO EXCERPTS: . . . because prices haven't dropped, which is kind of weird, demand really hasn't dropped all that much. We've seen a little bit movement in some subsectors like say jet fuel and diesel, but for the most part, people are continuing to consume crude like this isn't a long-term [laughter] problem. Oh my god.

Anyway, at some point in June or early July, we're going to hit the wall. The primary reasons why it hasn't happened already is we've got two little factors in play...

[...] So roughly two to two and a half million barrels a day of crude from our strategic petroleum reserve are just crossing the Atlantic and helping out the Europeans. And since the Europeans are so much more efficient at energy use than we are, that has really helped them kind of square the circle uh in the midterm. It won't last much longer, but for now it's holding.

On the Asian side [...] And that has prevented the Chinese from having runaway price increases. You combine that with their large scale application of very small electric vehicles and a grid that primarily runs on coal, anyway, and they've bought some more buffer. But all of this is going to evaporate over the course of the next 3 to 6 weeks.

So we're we're very close to the break assuming nothing else goes wrong. And as we have seen in the past that if we do get into a hot war situation again, the Iranians have easily demonstrated that they can hit any part of the export infrastructure from the Persian Gulf that bypasses the straight of Hormuz, specifically the bypass pipelines that the United Arab Emirates and the Saudis have.

So ironically, probably the best that can be hoped for right now is no hostilities, but the Persian Gulf still closed. If the Persian Gulf were to reopen tomorrow, it would be months before any new crude would flow because it just takes that long to turn these fields back on and in some cases years.

So, the late June and into July deadline is probably going to happen regardless of what happens with the negotiations that are ebbing and flowing back and forth. So, get ready for a fun summer...

PETER ZEIHAN (geopolitics) ... https://youtu.be/312_GNWSs7k

https://www.youtube-nocookie.com/embed/312_GNWSs7k