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Without a US-Iran Peace Deal, the World Is Headed for an Energy Crisis Apocalypse
Global reserves of petroleum could fall so low by September, if the crisis is not resolved, that they will reach what analysts call “an operational floor.”
Jun 06, 2026
The International Energy Agency has made its May report free to download, and the news is not good for the second and third quarters of this year, i.e. April-September. The IEA hopes things will look up in the fourth quarter, but premises that expectation on an early end to the US conflict with Iran and a reopening of the Strait of Hormuz.
At the moment (June 5, 2026), there does not seem much movement on that front, and in fact the US and Iran are not only skirmishing with one another but Iran is making good its threat to hurt US allies like Bahrain and Kuwait every time the US hurts Iran.
One was killed and dozens injured in Kuwait on Wednesday by Iranian Shahed drone barrages that also damaged the airport. Kuwait Airlines shut down briefly but is now flying from a different terminal; it is the only carrier flying from Kuwait. Iran also targeted the HQ of the US Fifth Fleet in Bahrain but CENTCOM says the missiles were intercepted. Iran says the attacks were in reaction to US strikes on Qeshm Island, which is a base for Iranian missiles and a radar installation.
Iranian Foreign Minister Abbas Araghchi said Friday Iran time that no progress has been made in talks with the US, though contacts are ongoing.
Last week alone, US petroleum reserves fell by 10.6 million barrels, to the lowest level seen since 2004.
In the meantime, the IEA says that in Q2, ending June 30, world demand for petroleum will be down by 2.45 million barrels a day. This reduction is what economists call demand destruction, and it is a very bad sign. People are just using less petroleum because it is more expensive than it was before the US and Israel attacked Iran on February 28. In the US, gasoline is up by 35% to 50%. In Europe, diesel, which runs trucks, was the equivalent of $6.78 a gallon in February, and is now $8.02 per gallon (€1.82 per liter). If you are running a fleet of trucks over thousands of miles, that is a huge loss, and you might consolidate and cut out less remunerative routes.
Likewise, airlines have cancelled tens of thousands of flights and ticket prices have risen, so some passengers are cancelling or postponing trips. Trucks deliver goods to retail stores, so prices of commodities have gone up, and some customers have put off buying things they don’t desperately need right now. If the retailer doesn’t sell a product, it doesn’t order more, so the trucks don’t roll as often. And if the goods aren’t selling, the factories scale back production, so they use less petroleum, too.
The IEA statistics suggest that the pain is greater for the poorer countries, which makes sense. The wealthy countries’ consumers are paying more and cutting back a bit. Those in the developing world are just going without, as I pointed out on Monday.
The IEA expected the world to produce 106.1 million barrels a day in 2026. It won’t. That projection has been revised down to 102.2 million barrels a day, a reduction of 3.9 million barrels a day. That is severe. But here is the catch. That is the reduction if “flows through the Strait gradually resume from June.” As Qasim al-Ali points out, that is an iffy bet as things now stand. So the shortfall in production will be bigger. Which will slow the world economy even more.
The agency observes, “With Hormuz tanker traffic still restricted, cumulative supply losses from Gulf producers already exceed 1 billion barrels with more than 14 mb/d of oil now shut in, an unprecedented supply shock.”
The shock hasn’t been as bad as it could have been so far, for several reasons. We just saw that there is enormous demand destruction, with the economic slowdown it implies. Also, there was a glut in the oil market going into the crisis, which takes some of the pressure off. The US, Europe, and China are drawing down their Strategic Petroleum Reserves (SPRs) at an alarming rate. That move eases the pain in the short term. But low reserves imply a limited ability to deal with further supply shocks that may occur next year. Israeli Prime Minister Benjamin Netanyahu has signaled that he’d like to attack Iran again. So the big crisis may be next year this time, when there won’t be any SPR cushion.
Also, Strategic Petroleum Reserves are not infinite. China has enough for six months. At some point governments will become reluctant to draw them down any more, and then the interruption in supplies from the Gulf will hit all that much harder. The reserves held at oil hubs can’t go to zero, moreover. The inventory at Cushing, Oklahoma has fallen from 33 to 24.5 million barrels. But it can’t go lower than 20 million barrels without gumming up the pipelines and refineries.
Last week alone, US petroleum reserves fell by 10.6 million barrels, to the lowest level seen since 2004.
Global reserves of petroleum could fall so low by September, if the crisis is not resolved, that they will reach what analysts call “an operational floor.”
And when that happens, the shortages won’t be able to be finessed anymore, not by demand destruction and not by release of reserves.
And when we cross that threshold, oil shoots suddenly to $200 a barrel, which is an energy crisis apocalypse and spells deep gloom for the global and the US economy.
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No Matter Who Wins the Iran War, the Global Economy Is Losing
The most vulnerable populations of the Global South are suffering ever-increasing distress, while most of the world has been experiencing rising inflationary pressures and increasing interest rates on government bonds.
May 26, 2026
For all the uncertainty about what will happen next on the military and diplomatic front in the Iran war, there is certainty about what has already happened on the economic front. And it is not good.
The world has seen a spike in oil prices that has been moderated so far by large drawdowns in global oil reserves. In addition, the most vulnerable populations of the Global South are suffering ever-increasing distress, while most of the world has been experiencing rising inflationary pressures and increasing interest rates on government bonds. And even if the US stock market appears relatively unperturbed, a version of this unpleasant mix has also hit the United States.
Global oil prices are much higher than they were before the war, with the financial market benchmark price of Brent crude late last week (down to $91 on weekend news of a possible deal), well above the $60 per barrel of early January. That said, crude prices have been relatively stable within a broad range over the last two months despite a dramatic drop in energy shipments out of the Persian Gulf since the war began.
According to the International Energy Agency (IEA), as of May 13, the cumulative shortfall in global oil deliveries from the Gulf was roughly 1 billion barrels. This shortfall has been absorbed by reduced oil demand (a consequence of higher prices); increased production outside the Gulf; and by a drop in global oil inventories of roughly 250 million barrels, as these were released to hold down prices in the absence of new production from the Gulf coming to the market. However IEA head Fatih Birol warned last week that inventories were dropping at an unsustainable pace, particularly with summer driving season approaching in the Northern Hemisphere.
For all that US energy exporters might benefit from higher global oil prices, US consumers do not.
The biggest shock from the higher cost (and outright shortage) of fuel, petrochemicals, and fertilizers is being felt by the poorest in the Global South. A recent story in The New York Times described how the price for transporting corn into refugee camps in Somalia had doubled or even tripled, as had the price of water at diesel-powered public tubewells. Meanwhile, protests this week in Kenya against fuel price hikes have led to four deaths, and political and financial stresses are mounting across the continent.
In India, sharp jumps in the price of Liquid Petroleum Gas have hit urban households hard, particularly those whose breadwinners work in small-scale industrial establishments. Many such enterprises rely on LPG as fuel and have shut down, displacing a workforce composed of recent migrants from the countryside. And because informal migrant workers in the city do not have access to India’s price-controlled public distribution systems, they have been forced to purchase cooking fuel on the black market at exorbitant rates. The combination has sparked fears of a repeat of a mass return to the countryside, as happened in the Covid-19 summer of 2020.
Stories like these abound across the Global South. A report from the World Food Program (WFP) two months ago (when the war was two weeks old) projected that 45 million more people could be thrust into acute hunger if the war persisted. And a panel of global officials had already warned the world at the International Monetary Fund meetings in Washington in mid-April that even an immediate cessation of the war would require at least two months before global shipping approached a semblance of normalcy.
Weakness in the real economy of many developing countries has been compounded by financial pressures in the form of larger trade deficits driven by the jump in oil prices, higher inflation, depreciating currencies, drawdowns in central bank reserves, and the threat of central bank rate hikes to keep inflation in check even if the economy is weakening.
In the face of such pressures, many countries were forced to sell foreign exchange or gold reserves to defend their currencies from further depreciation. According to Bloomberg, losses in the Philippines amounted to 8.1% of all reserves, in India to 5.1%, and in Indonesia to 3.8%. India has also imposed stiff tariffs and other restrictions on gold imports, and Prime Minister Narendra Modi has urged Indians to avoid “unnecessary foreign travel,” in additional efforts to limit further pressure on the Rupee from non-energy imports or tourism. And Malawi is reportedly selling not just gold reserves but also semi-processed gold bars bought from local miners.
Europe is less dependent on Persian Gulf oil, with only 7% of it sourced there, as opposed to Asia, which draws roughly 60% of its oil from the region. Even so, it is not immune to the impact of higher prices, with the European Commission’s economic czar warning that the continent faces a stagflationary shock. As a relatively wealthy continent, the EU (and the UK) can afford to grant fiscal subsidies to affected businesses, thus reducing the pain there. However, such measures also force the need to reduce oil demand on the poorest countries that are unable to afford such backstops.
Latin America has proven more resilient to the shocks from the Iran war, helped by the fact that Argentina, Brazil, Colombia, and Ecuador are all net energy exporters, while Mexico runs a small energy deficit but buys most of its natural gas from the US. Chile is the sole large outlier on the front. Still, the energy trade might cushion most major Latin American currencies from sharp depreciation and financial stress, but as an agricultural exporter, the region is vulnerable to higher fertilizer prices and to inflation that could force central banks to raise interest rates.
In the United States, the administration has downplayed the impact of the war on the American people and emphasized how the dramatic increase in US oil production has led to a substantially lower reliance on imported energy. Treasury Secretary Scott Bessent has said that the administration's policies of “energy abundance” have helped the country withstand the shocks from the Iran War. And President Donald Trump said in April that “the United States imports almost no oil through the Hormuz Strait and won’t be taking any in the future…We don’t need it.”
In his recent remarks, Bessent observed that the war had also allowed the US to “focus on the opportunity at hand” as global demand for US energy surged. And, indeed the war has led to a dramatic increase in US exports of crude oil and downstream products. A recent piece in The New York Times noted that the US has exported an additional 145 million barrels of oil since the war began, leading to an increase in revenues of roughly $50 billion.
However, the flip side to this is that US consumers have reportedly spent an extra $40 billion on gasoline prices since the war began. For all that US energy exporters might benefit from higher global oil prices, US consumers do not. And research from the New York Fed suggests that lower-income households were hit much harder by higher energy prices, changing travel patterns in order to keep their gasoline budgets from getting out of hand.
American agriculture, meanwhile, has been hit with a double whammy as two major operating costs, fertilizer and diesel, have both seen sharp price increases. A report last month by the Farm Bureau suggested that 70% of all farmers say they are unable to afford all the fertilizer they need. This in turn could translate into lower crop yields and higher food prices—a worry that is even more pronounced among smallholders in the Global South, underlying the global effects of this war.
And while the US stock market has remained relatively buoyant through all this, boosted primarily by Artificial Intelligence and Semiconductor stocks, there are signs of deeper worries in global bond markets, including in the United States. Concerns over inflationary pressures driven by rising energy and food prices have combined with worries over the rising fiscal costs associated with increased defense budgets, fuel subsidies, and massive reconstruction needs to push global bond yields up significantly.
After annual consumer price inflation in the US jumped to 3.8% (far above the Federal Reserve’s 2.0% inflation target), the US Treasury’s 30-year bond hit its highest yield in 30 years last week. And while that might be good news for those who own newly issued bonds and will receive the interest paid on them, it is less favorable for those looking to buy or refinance a home as mortgage rates rise alongside US government bond yields.
Thus, the impact of this war within the US might not be as severe as that in large parts of the Global South, but even within America, there will be many more who lose than gain from the economic consequences of this war.
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Incompetent Trump Is Driving Us Toward Global Political-Economic Collapse
Operation Epic Fury is only the most severe example of President Donald Trump's poor decision-making, which is likely to produce one mega-disaster after another.
Apr 07, 2026
On March 13, buried in The New York Times’ coverage of the US-Israel-Iran conflict was a headline that would have been easy to miss amid the din of war coverage: “As El Niño Simmers, Scientists Warn of Weather Extremes Starting in Late Summer.” Many readers may not even have noticed it, but that article noted that scientists at the Climate Prediction Center, a part of the National Oceanic and Atmospheric Administration, had raised their estimate for an El Niño event this summer from 60% to about 80%.
Admittedly, in this strange world of ours, that hardly seemed like an earth-shattering revelation. But if you had read the piece more closely, your alarm bells should instantly have gone off. Forecasters now predict that the coming El Niño—a warming of the Pacific Ocean that deeply affects global weather patterns—is likely to be as severe as the one in 2023-2024, which triggered severe flooding and prolonged heatwaves around the world. As the article noted, however, average world temperatures are now actually higher than they were at the height of that previous El Niño, thanks to global warming, and so it’s likely that we will face even more intense heatwaves and flooding this time around.
Consider that news alarming enough. Unfortunately, the bad news didn’t end there. The Times article went on to report that, since early last year, the Trump administration has laid off thousands of Federal Emergency Management Agency (FEMA) workers, greatly diminishing the agency’s ability to respond to such impending weather disasters. And then there’s the dismal fact that Trump has overseen the dismantling of the US Agency for International Development, which once sent humanitarian aid to disaster-struck countries.
And, sadly enough, it only gets worse from there. After all, we know that the Trump administration is doing everything it can to boost the production of fossil fuels—the consumption of which is the main driver of global warming—even as it also works to impede global action to slow the warming process. On January 7, for example, the president announced that the United States would withdraw from the United Nations Framework Convention on Climate Change, the bedrock treaty upon which most international efforts to rein in that onrushing nightmare are based.
In other words, the rest of us will not only be deprived of emergency assistance during future climate disasters, but also lack timely information about oncoming hazardous weather patterns.
Likewise, on February 12, the administration repealed the scientific determination (called the “endangerment finding”) that gives the government the legal authority to combat climate change. And that’s not all: On March 15, the Times also reported that the administration was preparing to dismantle the National Center for Atmospheric Research, the nation’s premier institution for studying global weather patterns—including the severe climate disturbances we can expect from the coming El Niño and higher world temperatures. In other words, the rest of us will not only be deprived of emergency assistance during future climate disasters, but also lack timely information about oncoming hazardous weather patterns.
As I consumed all of that—in the midst, of course, of President Trump’s ill-conceived war on Iran—it struck me that we need to brace ourselves for ever more calamitous outcomes from Donald Trump’s extreme leadership incompetence. In fact, his incompetence is likely to produce one mega-disaster after another, culminating perhaps in global political-economic collapse.
Trump’s Profound Incompetence
Donald Trump’s leadership incompetence has already been demonstrated in one bad move after another. His capricious imposition of ever-fluctuating tariffs on US imports, for example, has caused prolonged misery for farmers and many small and medium businesses that depend on predictable trade patterns. Likewise, his heavy-handed deployment of armed Immigration and Customs Enforcement and other federal agents to Minneapolis achieved little in the way of apprehending dangerous immigrants but caused widespread disorder and violence, while killing two nonviolent protesters. But the most severe example of his governing incompetence to date has been his handling of Operation Epic Fury, the war with Iran.
While devising an elaborate plan to destroy Iran’s conventional military capabilities and shatter the regime, the Trump team appears to have made no preparations to eliminate the Iranians’ extensive drone capabilities or their ability to disrupt oil production and transit in the Persian Gulf area, with far-reaching global consequences. As of this reporting, the critical Strait of Hormuz through which one-fifth of the world’s oil supply passes every day (along with a substantial share of its liquefied natural gas [LNG] and chemical fertilizers) remains largely closed to commercial traffic. This has produced energy shortages in many countries that are heavily reliant on imported oil or LNG and, because oil is a globally-traded commodity, it has boosted gasoline prices in the United States, despite the fact that this country doesn’t import much Middle Eastern oil.
None of this should have been unexpected. The Iranians have, on numerous occasions, threatened to block the Strait of Hormuz in response to a US attack on their country, while their efforts to build up a vast stockpile of drones and missiles (and to hide them in remote underground sites) were well publicized.
Any intelligent war planner—of which there are many in the US military establishment—would have known of these realities and planned for them. Indeed, US planning to secure the Strait goes back to 1980, when President Jimmy Carter’s White House issued what became known as the “Carter Doctrine”—an assertion that any move by a hostile force to impede the oil flow in the Persian Gulf “will be repelled by any means necessary, including military force.” To enforce that edict, the Pentagon established the US Central Command (Centcom) and established a network of military bases throughout the Gulf region. Since its inception, Centcom has repeatedly stressed its ability to keep the Strait open in the face of any Iranian drive to block it.
Trump obviously ignored all such intelligence—collected over many years by top American officials—and started his war without the slightest apparent plan for keeping the Strait safe for energy shipping. Not only were US naval forces unprepared to escort oil tankers through it, but Trump failed to enlist US allies in such efforts—a glaring fault that only became obvious after the war began when he suddenly called upon them to do so (and chided them when they proved reluctant).
And consider all of this sheer, unadulterated incompetence, on a massive scale.
The Blows to Come
We have yet to witness all the consequences of Trump’s incompetence in undertaking the war against Iran. The shutdown of fertilizer exports from the Gulf is already causing the price of that critical commodity to rise around the world. In doing so, it threatens agricultural production as farmers balk at the higher costs—a trend likely to result in higher food costs everywhere, including the United States. That will, of course, result in increased hunger for those least able to afford the higher prices of food and rising inflation. The rise in food and energy prices could also diminish consumer spending and investor confidence, possibly leading to a global economic slowdown (or worse).
And don’t imagine that those are the only major shocks to the global system we can expect in the months ahead—shocks the Trump team is unlikely to address with competent leadership. At the January convocation of business and political elites in Davos, Switzerland, the World Economic Forum released its “Global Risks Report 2026,” identifying what experts believe are the greatest future threats to global stability and prosperity. According to those experts, the top risks include extreme weather events, state-based armed conflict, and a global economic downturn—real-time threats that Trump has already encountered and failed to address successfully. As those perils gain momentum in the months ahead, Trump’s incompetence will result in ever greater hardship and suffering.
The Adverse Effects of AI
That Davos Risk Report also identified another category of threats for which the Trump administration is woefully unprepared: “adverse outcomes of AI technologies.”
Beginning with AI’s impending impact on employment, the report cites one study suggesting that “AI could eliminate up to 50% of entry-level, white-collar jobs within the next five years in the United States, potentially driving unemployment to 10-20%”—an enormous threat to social and political cohesion. At the same time, a massive buildup of computing data centers is putting extreme stress on local energy and water supplies across the US, introducing an added layer of popular unease and conflict.
Nowhere does Trump’s plan acknowledge the potential for catastrophic job losses from widespread AI utilization or the risk of AI going rogue and threatening the survival of humanity.
Hovering in the background of all this is the threat of “rogue AI”—the possibility that computer scientists at OpenAI, Anthropic, or one of the other leading AI firms will create a “superintelligent” version of AI capable of outperforming humans in most cognitive tasks and selecting its own objectives, independent of human wishes or instructions. Think of “Skynet,” the superintelligent AI in the Terminator movie series that chooses to eliminate humans by inciting a global nuclear war. While the Davos Risk Report doesn’t address the risk of advanced AI development directly, there is growing talk in the scientific community of just such an outcome, as vividly suggested, for example, by the 2025 book If Anyone Builds It, Everyone Dies: Why Superhuman AI Would Kill Us All by Eliezer Yudkowsky and Nate Soares of the Machine Intelligence Research Institute.
And I’m sure you won’t be surprised to learn that President Trump and his entourage are wholly unprepared to address the very idea of such a possibility. Rather than emphasize safety in the development of advanced AI models, Trump has called for their untrammeled evolution. In his major policy statement on AI, “Winning the Race: America’s AI Action Plan,” he made his top objective overridingly clear: “It is a national security imperative for the United States to achieve and maintain unquestioned and unchallenged global technological dominance.”
That means, as his plan explains, eliminating all barriers to the development of advanced AI models, including any legislative restrictions on their release and any local environmental impediments to the construction of mammoth AI-driven data centers nationwide. Nowhere does Trump’s plan acknowledge the potential for catastrophic job losses from widespread AI utilization or the risk of AI going rogue and threatening the survival of humanity. Rather than offering Americans the slightest protection from such potential calamities, he is ensuring that they will become more likely and that the rest of us will suffer the consequences.
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How the Iran War Could Lead to a Crash Worse Than 2008
It’s too late to prevent the inflation of an AI bubble or to advise against a US attack on Tehran. At this point, the most we can do is to hope for a quick end to the war and for some improvisational brilliance among the world’s leaders of government and finance.
Mar 21, 2026
Several commentators have remarked that the United States’ war on Iran carries echoes of 2008. I’ll argue here that a potential financial crash this year could actually be much worse.
The Global Financial Crisis (GFC) of 2008 was the biggest economic crunch since the Great Depression. Unemployment surged, topping 10% in the US. Global stocks lost trillions of dollars in value. Major brokerage houses collapsed. The US auto industry only survived thanks to enormous government bailouts. How could another crash top that?
Consider the causes. The 2008 Great Recession resulted from a confluence of three factors:
- Failed US wars in the Middle East, in that instance against Iraq and Afghanistan. Many economists argue the Iraq and Afghanistan Wars contributed to the GFC by fueling massive American budget deficits and worsening trade imbalances, and by creating a “capital flow bonanza” that triggered the US credit boom. While not the sole cause, the war compounded the vulnerability of the US economy.
- Soaring oil prices, following the plateauing of world conventional oil production in 2005. Oil demand continued to rise but the global supply of oil did not follow suit. On July 11, 2008, crude prices hit $147 per barrel, their all-time high. Since the economy runs on energy and oil is the world’s most important energy source, oil prices have a way of impacting all industries. Financial markets crashed three months after the oil-price peak.
- A bursting financial bubble inflated by subprime mortgages in the US and financial derivatives traded worldwide. The mortgage bubble involved $1.3 trillion to $1.5 trillion in high-risk loans issued during the 2000-2006 housing boom. It was a house of cards waiting to tumble.
The resulting unwinding of debt and derivatives came within a hair’s breadth of turning into a massive bank run and general economic collapse. Governments (led by the US) bailed out industries and banks, lowered interest rates to zero, purchased large tranches of financial securities, and instituted enormous fiscal stimulus programs and tax cuts. Even with these rapid and maximum-scale efforts totaling hundreds of billions of dollars, the GFC led to widespread housing foreclosures, a near-40% downturn in the S&P 500, and a substantial increase in the poverty rate.
Now consider the following:
- Today’s AI financial bubble is four times bigger than the subprime mortgage bubble of 2008 and 17 times bigger than the dot-com bubble of 2000.
- The Iran war, though so far not involving US ground troops, could possibly end up being more problematic than the Iraq invasion of 2003, if only from the standpoint of flows of energy and international trade. The war is likely to result in real oil shortages and prices potentially even higher than those seen in 2008. Additionally, more of the Middle East is now involved in hostilities, and oil and gas production and shipment infrastructure is being damaged or destroyed, thereby undermining the long-term economic prospects of the region, as well as destabilizing its politics. No one knows how this will end.
- For the US economy, warning signs were already flashing before the war: Stubbornly high inflation, a bad jobs picture, and worsening consumer sentiment were indicators of a looming recession.
- The final factor can be stated as a question: Would today’s US Treasury head be as successful at averting financial doom as was Henry Paulson in 2008? Then, the US was able to enlist government and business leaders from the world’s key countries in cooperating to fashion a collective survival strategy. Would current US Treasury Secretary Scott Bessent have similar success, given the recent global collapse of trust in US leadership?
In view of the possibly catastrophic consequences of the attack on Iran, many people wonder what motives could have justified it. Logan McMillen argues in Foreign Policy in Focus that the so-called “Donroe Doctrine” intends to freeze China out of the Western Hemisphere and to deprive it of cheap energy:
The strategy is entirely zero-sum. By turning the Middle East and the Caribbean into militarized chokepoints, the United States is suffocating China’s independent oil supply lines, starving its industrial capacity while guaranteeing temporary windfall profits for Western supermajors. Concurrently, from the lithium flats of Bolivia to the ports of Peru, Washington is deploying right-wing proxies and military coercion to systematically dispossess Chinese capital in Latin America, re-colonizing the Andes to secure the supply chains of the 21st century.
Other commentators see the war as being spearheaded by members of the Christian Zionist movement, which desires a fulfillment of biblical prophecies of the battle of Armageddon and the return of Jesus.
Even if McMillen’s analysis is sound and there is an arguably rational motive behind the war, that doesn’t mean the campaign will go according to plan or that it will achieve its aims. Many analysts see it already careening off the rails.
It’s too late to prevent the inflation of an AI bubble or to advise against a US attack on Tehran. At this point, the most we can do is to hope for a quick end to the war and for some improvisational brilliance among the world’s leaders of government and finance.
Meanwhile, it would be smart to make whatever preparations you can. For folks in the Northern Hemisphere, it’s time to start planning this spring’s food garden. You might want to plant a few more rows of beans than you do most years, so you have enough to share with neighbors.
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Trump and Israel’s War on Iran Once Again Exposes the Folly of Fossil Fuel Dependence
The world’s leaders should not only condemn US and Israeli aggression that has thrown the global economy into a tailspin but also take action to insulate their economies from this relentless cycle of fossil-fueled violence, volatility, and instability
Mar 19, 2026
As the US and Israeli war on Iran continues into its third week, the human, economic, and ecological impacts are devastating. Some 3,000 Iranians have been killed, including 165 children in one school strike, 10,000 injured, and 3.2 million displaced.
The war has caused a crisis. The World Health Organization has warned that with many oil storage tanks hit, resulting in “black rain” falling on Tehran, there is "danger for the population." The debris contains toxins that can cause respiratory and neurological damage, as well as certain kinds of cancer. For US consumers, who were promised that President Donald Trump would stop foreign conflict, the war is costing more than $890 million a day in direct costs, before we factor in the rising costs of energy. This is money that could be spent on education and healthcare.
The war has also brought chaos to global oil markets. Middle East producers have cut oil production by at least 10 million barrels per day, sending oil prices soaring. With no end to the conflict in sight, oil markets remain jittery and volatile.
Spikes in the price of oil affect billions of working people worldwide. They are forced to pay more to fill up their tanks, heat their homes, and even purchase food, since fertilizer is often made from fossil fuels. Rising energy prices can also cause knock-on inflation in the price of other consumer goods.
It is nonsensical that the global economy is so dependent on a 21-mile strait of water staying open to tanker traffic.
On Tuesday, the price of a barrel of Brent crude, the global benchmark for oil, was close to $104, up almost 50% from before the conflict started. By Thursday, after strikes on Gulf oil and gas infrastructure, oil was $119 a barrel and gas jumped 30%, with industry insiders calling it an “Armageddon scenario.” “The world does not need $120 oil,” said Steven Pruett, chief executive of one Texas-based oil producer, Elevation Resources. “It’s going to cause economic destruction.”
Last week, the global energy watchdog, the International Energy Agency, said that oil markets are suffering “the largest supply disruption in history.” The boss of Saudi Aramco, Amin Nasser, has warned of “catastrophic consequences” for the world economy if the US-Iran war drags on.
The problem lies with the Strait of Hormuz, the narrow waterway between Iran, the United Arab Emirates, and Oman. A quarter of the world’s oil—some 20 million barrels a day—passes through the Strait, which is only 21 miles wide at one point. And now, in retaliation for the US and Israeli aggression, Iran has effectively stopped traffic through the Strait by bombing tankers.
For decades, academics and the oil industry have warned that war in Iran could cut off the Strait in times of conflict. The industry has long feared what would happen if the Strait were to close. Chevron boss Mike Wirth recently said: “We do crisis management exercises… the big one has always been something in the Middle East that shuts the Strait of Hormuz… Markets are very uncomfortable, uncertain, volatile, and unpredictable.”
It has become increasingly apparent that Trump had no plan for dealing with the Strait’s closure after pleading earlier this week with European allies to help keep it open. In a scathing editorial, the New York Times wrote: “President Trump went to war against Iran without explaining his strategy to the American people or the world. It now appears that he may not have had much of a strategy at all.”
It added that he also “failed to plan for a predictable side effect of a war in the Middle East: a disruption of oil supplies that causes a price spike and impairs the global economy.”
The evidence bears this out. The threat of closing the Strait remained unseen by the Trump administration, bloodthirsty for regime change and blinkered by the ease of removing President Nicolás Maduro from power in Venezuela.
Before the strikes on Iran, Trump’s Energy Secretary Chris Wright had told an interviewer he was not concerned that the looming war might disrupt oil supplies in the Middle East and wreak havoc in the markets. Since the crisis began, Wright and Interior Secretary Doug Burgum have appeared “flummoxed” by the surge in prices, according to Politico. One industry official has called Burgum the “Where’s Waldo” of the crisis. Both men have been scrambling, but failing, “to head off a bout of energy-driven inflation.”
After a closed-door briefing to lawmakers last week, one Democratic Senator, Chris Murphy, said on social media that the administration had no plan for the Strait of Hormuz and did “not know how to get it safely back open.”
It's not all bad news for the oil industry, though.
Oil companies are set to make obscene profits. Oil Change researchers recently calculated that if oil prices rise just $20 a barrel, US producers will rake in $280 million in extra revenue every day. That’s over $100 billion a year. Shares in the six oil majors, BP, Chevron, Eni, ExxonMobil, Shell, and TotalEnergies, have soared by more than $130 billion in the first two weeks of the war.
This isn’t the first time global oil markets have been thrown into upheaval by war, and by looking to the past, we can see the dangers and possibilities created by oil shocks. In 2022, oil companies were able to use the invasion of Ukraine to increase their already massive profits.
For long-term economic security and stability, as well as a future safe from climate disasters, there needs to be a radical shift to renewables.
The five Big Oil companies—BP, Chevron, ExxonMobil, Shell, and TotalEnergies—reported combined profits of $196.3 billion the following year, more than the economic output of most countries. Working people around the world, as well as our climate, paid the price for Big Oil’s greed. For example, the war cost Canadians $200 billion over the next three years due to inflation spikes.
After the Ukraine war, Pakistan prioritized renewables. Energy analysts in the country believe that solar expansion has helped insulate the power sector from the spiraling energy costs.
“While we’re certainly seeing some impacts, the expansion of distributed solar in the country has provided a cushioning effect against the impacts [of the energy crisis]” Nabiya Imran, an associate at Renewables First, a Pakistani think tank, told The Guardian.
The world’s reaction to the 1973 oil crisis shows that a different path is possible. After oil prices quadrupled, there was significant investment in renewables and energy efficiency. Back then, the US government worked on a program to promote wind turbines and energy efficiency, which would be antithetical to the Trump administration.
Indeed, the madness of Trump’s current war on renewables is such that the administration is reportedly planning to pay nearly $1 billion to French energy company TotalEnergies to stop further offshore wind development.
Despite this, the chaos in the energy markets has led to renewed calls to get off oil and decarbonize. In the UK, The Guardian editorial board argued: “After Russia’s invasion of Ukraine, Europe swapped Russian pipeline gas for American LNG [liquefied natural gas]. Dependency didn’t disappear. Britain just changed suppliers. That is one reason among many why this crisis must see the government focus like a laser on faster decarbonisation, not more drilling.”
US tech corporation Microsoft, which donated $1 million to Trump’s inauguration fund, has also said the war strengthens the case for investment in clean energy sources and battery storage. “Wind and solar as, as part of that mix, is a huge benefit from the standpoint of price stability, because once you install it, you have more certainty around what that actual cost profile looks like,” the company told the Financial Times.
It is nonsensical that the global economy is so dependent on a 21-mile strait of water staying open to tanker traffic. It is nonsensical that oil prices are so volatile that they whipsaw on a tweet from Trump or even a misleading one from US Energy Secretary Chris Wright claiming the US military had successfully shepherded a tanker through the Strait. And it is deeply unjust that this volatility affects the household bills for billions of people.
As some pundits have pointed out, even if Trump declares victory, it is now up to Iran when they will allow the Strait to reopen. It can close it at any time in the future. Iran has the means to hold much of the global economy to ransom.
So, for long-term economic security and stability, as well as a future safe from climate disasters, there needs to be a radical shift to renewables. Leading pundits agree:
There is evidence that the war in Iran is beginning to cause the same shift in thinking that the 1973 oil crisis did. South Korean President Lee Jae Myung said this week that it was time to prepare major measures to conserve energy as the situation deteriorates. These include promoting energy conservation and “rapidly transitioning away from fossil fuels to renewable energy.”
It's also worth remembering that the US military is the largest emitter of greenhouse gases of any institution on Earth and the US is the largest producer of oil and gas globally. The military uses much of that might to defend US interests in fossil fuels.
The world’s leaders should not only condemn US and Israeli aggression that has once again thrown the global economy into a tailspin but also take action to insulate their economies from this relentless cycle of fossil-fueled violence, volatility, and instability. Moving away from fossil fuels does not guarantee world peace. We are already seeing conflicts over the rare earth minerals needed for solar and other green technologies in places like the Congo.
But it can insulate working people from the shocks triggered by the reckless aggression of powerful nations that consider themselves adequately protected from the consequences of their actions.
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The Iran War Reveals a Global Chokepoint
The current fixation of world attention on the Strait of Hormuz should remind us of the inherent brittleness of an economy in which our food and energy security, and our livelihoods, are intertwined with depleting and polluting resources and expectations of perpetual growth.
Mar 13, 2026
It’s unclear how long the United States’ war against Iran will last. Some reports suggest President Donald Trump might declare victory and cease attacks within days; others foresee a long campaign with American boots on the ground. The lack of clear US objectives invites speculation. Even if hostilities end soon, the war highlights a perennial vulnerability of industrial societies: their systemic dependency on fossil fuels.
The 24-mile-wide Strait of Hormuz in the Persian Gulf, through which roughly 20% of world oil shipments pass, is an obvious pinch point for a vital industrial resource. But it also serves as an apt metaphor for the brittle global supply chains upon which the entire economy depends.
The US-Israel-Iran conflict has led to dramatic oil price volatility, with a swing of nearly 40% recorded on a single day. Most economics commentators understand that higher oil prices can be a drag on the economy, but prices are only part of the story. The war is likely to lead to long-term damage to oil production, storage, and shipment infrastructure in the Middle East. In the best-case scenario, if hostilities end immediately, the world’s crude deliveries could be stabilized in six months. But stability would likely resume at a lower level of output, since the ongoing oil production capacity of Iraq and other Middle Eastern producing countries is likely being compromised.
Iraq is the second-largest producer in the region after Saudi Arabia. If oil can’t be shipped or stored, production must be cut—not a light decision, as shutting in oil production can damage wells. But that is what’s happening: Oil production from Iraq’s main southern oilfields has dropped by 70% thanks to the effective closure of the Strait of Hormuz. Saudi Arabia, the UAE, Kuwait, and Qatar have also reduced production due to the war. Iran even hit oil facilities in their closest ally in the region, Oman.
This is a system destined to fail.
While spot prices for crude oil have spiked and fallen in recent days, futures prices are stubbornly high. Savvy oil investors and industry analysts don’t expect this oil crisis to be resolved quickly. A week and a half after the start of the war, US gasoline prices were up nearly 60 cents per gallon on average; historically, higher gasoline prices driven by oil shortages have persisted for weeks or months after oil prices normalized.
Then there are secondary impacts, largely overlooked by the economics commentariat. So far, the Iran war has effectively closed off one-third of the world’s helium supply. Helium is a depleting nonrenewable resource, like fossil fuels. Qatar’s Ras Laffan facilities, which produce 17 metric tons of helium daily, are now offline. Experts warn that if the Strait is closed to shipping for longer than two weeks, months-long global helium shortages could ensue. Helium is indispensable in advanced semiconductor production processes.
While semiconductors are staples of high tech, food is a more basic necessity for humans. Roughly one-third of the world’s fertilizer supply passes through the Strait of Hormuz, and fertilizer prices are spiking. Unless the war ends within days and shipments resume quickly, global food prices will inevitably rise throughout the year.
These developments underscore a message that we at Post Carbon Institute have been repeating for over two decades. Oil and other fossil fuels are the basis of the modern industrial economy. They’re polluting, but they’re also depleting. And in the case of oil (and, increasingly, natural gas) they’re internationally traded at massive scales, raising geopolitical risks. This is a system destined to fail.
But when? During and shortly after the US invasion of Iraq in 2003, the all-time peak in world conventional oil production seemed to be at hand. Indeed, in the last two decades, conventional global oil output has exceeded its 2005 rate in only a couple of years.
However, total oil production has continued rising largely due to the soaring contributions of tight oil from the US, oil sands from Canada, and deepwater oil from Brazil. These unconventional sources of crude entail higher production (and environmental) costs than conventional oil. Indeed, oil prices have generally remained higher, in inflation-adjusted figures, than was the case pre-2005, though low enough to enable global economic expansion to continue at a slower pace.
Even if Trump TACOs and ends the attacks early, the war represents a significant shift in the trajectory of the modern industrial economy.
During the same time, efforts to battle climate change took the form of an energy transition from fossil fuels to renewable energy sources—mainly solar and wind power. While a shift toward renewables makes sense on many levels, the messaging from renewables promoters was sometimes overoptimistic: They promised that the world could replace fossil fuels with solar and wind quickly and completely, while still growing the economy. Our analysis suggests instead that the shift will take decades, during which energy consumption for non-transition purposes will have to decline significantly, and that total energy usage over the long haul, especially in highly industrialized countries, will be a fraction of current levels if civilization is to be sustainable. Further, supplies of minerals essential to the renewable energy transition are again globally traded and pose still more geopolitical chokepoints.
And here we are, 20 years past the effective conventional oil production peak, with the energy transition still in an early phase (fossil fuels now provide 82% of world energy, down from 85% five years ago). Installation of solar panels in the US fell in 2025, due to Trump administration anti-renewables incentives and penalties. Fracking is nearing its limits, with US tight oil production set to possibly begin its inevitable decline this year. The electrification of the economy (electricity currently accounts for about 21% of all energy usage) is essential to the energy transition, but the sudden growth of electricity demand for new data centers threatens to delay if not defeat the goal of shifting all energy usage—for transportation, manufacturing, agriculture, and more—to wires.
So, what a fine time for a war in the Middle East! If the war drags on for weeks or months, the economy and politics, local and global, will likely come unglued. If you want a longish analysis of what’s at stake, Craig Tindale has the best I’ve seen. Short version: An extended energy crisis will lead to global stagflation, food shortages, and increasing political instability. This could all get very ugly on many levels at once.
Even if Trump TACOs and ends the attacks early, the war represents a significant shift in the trajectory of the modern industrial economy. Financial bubbles are likely to get punctured by increased overall economic uncertainty. The US Federal Reserve’s plans to reduce interest rates will likely be derailed by higher energy and food prices. Robust oil prices will surely incentivize more investment in high-cost petroleum drilling, slowing the decline of tight oil production, thus putting off the energy transition even longer.
And remember, from the US perspective this is a war of choice, not necessity.
The current fixation of world attention on the Strait of Hormuz should remind us of the inherent brittleness of an economy in which our food and energy security, and our livelihoods, are intertwined with depleting and polluting resources and expectations of perpetual growth. More chokepoints loom.
As always, we advise community resilience as the best strategy for coping with what’s coming. Localize production and consumption, reduce your dependency on global supply chains, and get to know your neighbors.
This is going to be an interesting year.
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'The Situation Is Scary': Global Economic Chaos as Trump’s Iran War Sends Markets Diving
"To me, it was not just the worst-case scenario," said one economic analyst. "It was an unthinkable scenario."
Mar 09, 2026
President Donald Trump's unprovoked and unconstitutional war against Iran is sending shockwaves across the global economy in the form of skyrocketing oil prices and diving financial markets.
The prices of both Brent crude oil and WTI crude oil futures on Monday surged past $100 per barrel, as countries across the Middle East announced production cuts in the wake of chaos and destruction caused by the Iran war.
The impact of the price surge on the US stock market was immediate, as the Dow Jones Industrial Average opened Monday trading down by more than 600 points, while the Nasdaq dropped by 300 points.
According to a Monday report from the Wall Street Journal, both Iraq and Kuwait have announced oil production curbs because they have been unable to ship their supply through the Strait of Hormuz and have thus run out of space to store excess petroleum.
JPMorgan Chase analyst Natasha Kaneva noted to the Journal that this is the first time in recorded history that the Strait of Hormuz has ever been completely closed off for shipping, and warned the economic consequences would be severe.
"To me, it was not just the worst-case scenario," Kaneva said of the strait's closing. "It was an unthinkable scenario."
The Journal wrote that Trump's decision to launch a war with Iran has already sparked "the most severe energy crisis since the 1970s," which is now "threatening the global economy."
Petroleum industry analyst Patrick De Haan wrote in a Monday analysis that US drivers should expect to feel the impact of this oil shock in the coming days.
"Gasoline prices in many states could climb another 20 to 50 cents per gallon this week, with price-cycling markets potentially seeing increases as early as today," De Haan projected. "Diesel may rise even more sharply, with increases of 35 to 75 cents per gallon possible as global distillate markets react."
In a Monday analysis posted on his Substack page, Nobel Prize-winning economist Paul Krugman dove into the logistics of stopping and restarting oil production, and argued that the impact of the strait's closure will grow significantly as time goes on.
"As the Strait remains closed, producers are shutting down, and this isn’t like turning off a tap that can be quickly restarted," Krugman explained. "There’s apparently a real nonlinearity here: a two-week closure of the Strait has much more than twice the adverse impact on global oil supply as a one-week closure. If this goes on for multiple weeks... oil prices, which retreated slightly off their highs early this morning, could go much higher."
Krugman said that the shock was not yet bad enough to make an economic crisis inevitable because the US is much less dependent on oil than it was in the 1970s.
Nonetheless, Krugman cautioned, "the situation is scary."
Punchbowl News reported on Monday that the politics of the Iran war "have to worry" incumbent Republicans who were already in real danger of losing their majority in the US House of Representatives even before Trump launched an illegal war.
"With the Strait of Hormuz closed, oil prices have soared to more than $100 per barrel (from just under $70 per barrel 10 days ago)," wrote Punchbowl News. "There’s been a huge spike in gas prices nationally."
The report added that Trump has not been helping his party by expressing indifference bordering on hostility to Americans' concerns about how his war will impact their personal finances.
"Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace," Trump wrote in a Sunday Truth Social post. "ONLY FOOLS WOULD THINK DIFFERENTLY!"
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'Batsh*t Crazy' Trump Tariffs Should Be Seen as $7,000 Tax Hike on Workers, Says Economist
Instead of strategically imposing tariffs, Trump has chosen to "give the country the most massive tax increase in its history, possibly exceeding $1 trillion on an annual basis."
Apr 03, 2025
As stocks "nosedived" on Thursday, economists, policymakers, and campaigners around the world continued to warn about the impacts of U.S. President Donald Trump's trade war, which includes a 10% universal tariff for imports and steeper duties—that he claims are "reciprocal"—for dozens of countries, set to take effect over the next week.
"This is how you sabotage the world's economic engine while claiming to supercharge it," wrote Nigel Green, CEO of the international financial consultancy deVere Group. "Trump is blowing up the post-war system that made the U.S. and the world more prosperous, and he's doing it with reckless confidence."
As Bloomberg detailed after the president's "Liberation Day" remarks from the White House Rose Garden:
China's cumulative tariff rate of 54% includes both the 20% duty already charged earlier this year, added to the 34% levy calculated as part of Trump's so-called reciprocal plan, according to people familiar with the matter. The European Union's rate is 20% and Vietnam's is 46%, White House documents showed. Other nations slapped with larger tariffs include Japan with 24%, South Korea with 25%, India with 26%, Cambodia with 49%, and Taiwan with 32%.
In Europe on Thursday, "the regional Stoxx 600 index provisionally ended down around 2.7%," while "the U.K.'s FTSE 100 was down 1.6%, with France's CAC 40 and Germany's DAX posting deeper losses of 3.3% and 3.1%, respectively," according to CNBC.
In the United States, CNBCreported, "the broad market index dropped 4%, putting it on track for its worst day since September 2022. The Dow Jones Industrial Average tumbled 1,200 points, or 3%, while the Nasdaq Composite fell 5%. The slide across equities was broad, with decliners at the New York Stock Exchange outnumbering advancers by 6-to-1."
American exceptionalism.
[image or embed]
— Justin Wolfers ( @justinwolfers.bsky.social) April 3, 2025 at 12:14 PM
However, as Economic Policy Institute (EPI) chief economist Josh Bivens noted last week, "because most households depend overwhelmingly on wages from work as their primary source of income and not returns from wealth-holding, the stock market tells us nothing about these households' economic situations."
And Trump's tariffs are expected to hit U.S. households hard, as the cost of his taxes on imports are passed on to consumers.
"Tariffs can be a legitimate and useful tool in industrial policy for well-defined strategic goals, but broad-based tariffs that significantly raise the average effective tariff rate in the United States are unwise," Bivens and EPI senior economist Adam Hersh stressed in a Thursday statement—which also called out Trump for mischaracterizing one of the think tank's 2022 analyses.
"Further, the second Trump administration's rationale, parameters, and timeline for tariffs have been ever-shifting," Bivens and Hersh continued. "As the original post cited by the administration argues, tariffs should not be a goal unto themselves, but a strategic tool to pair with other efforts to restore American competitiveness in narrowly targeted industrial sectors."
Instead of strategically imposing tariffs, Trump has chosen to "give the country the most massive tax increase in its history, possibly exceeding $1 trillion on an annual basis, which comes to $7,000 per household," warned Center for Economic and Policy Research co-founder and senior economist Dean Baker. "And this tax hike will primarily hit moderate and middle-income families. Trump's taxes go easy on the rich, who spend a smaller share of their income on imported goods."
Baker—like various other economists and journalists—also took aim at Trump's claims that the tariffs are reciprocal, explaining:
Trump's team calculated our trade deficit with each country and divided it by their exports to the United States. Trump decided that this figure was equal to that country's tariff on goods imported from the U.S.
Trump's method of calculating tariffs is comparable to the doctor who assesses your proper weight by dividing your height by your birthday. Any doctor who did this is clearly batshit crazy, and unfortunately so is our president. And apparently none of his economic advisers has the courage and integrity to set him straight or to resign.
However, outside Trump's administration, the intense criticism continued to mount, including from groups focused on combating the fossil fuel-driven climate emergency, which also endangers the global economy.
Andreas Sieber, associate director of policy and Campaigns at 350.org, said Thursday that "Trump's tariffs won't slow the global energy transition—they'll only hurt ordinary people, particularly Americans."
"Despite his claims he 'gets' economic policy, his record tells a different story: Tariffs are tanking U.S. stocks and fueling inflation," Sieber added. "The transition to renewables is unstoppable, with or without him. His latest move does little to impact the booming clean energy market but will isolate the U.S. and drive up costs for American consumers."
Allie Rosenbluth, U.S. campaign manager at Oil Change International, similarly emphasized that "Trump's tariffs will hurt working families first and foremost, raising costs for essentials we depend on and threatening to plunge the U.S. economy into a recession. Though Trump pretends to care about the cost of living for ordinary people, his real loyalties lie with his fossil fuel industry donors."
"If he actually cared about energy affordability, he would stop bullying other countries into buying more U.S. liquefied natural gas (LNG), which boosts the fossil fuel industry's profits, but results in increased prices for domestic consumers and pushes us further toward climate catastrophe," she asserted. "The one step countries can take to hit Trump where it hurts most is wean off their dependency on fossil fuels from the United States."
The impact of Trump's new levies won't be limited to working-class people in the United States. Nick Dearden, director of U.K.-based Global Justice Now, pointed out that "Trump has set light to the global economy and unleashed a world of pain, not least on a group of developing countries that will suffer tremendous impoverishment as a result of his punitive tariffs."
"All those affected must come together and stand up to this bully by building a very different international economy that promotes the interests of ordinary people rather than the oligarchs standing behind Trump," he argued. "For all its scraping and crawling, the U.K. got no special treatment here, and the government should learn this lesson fast: They need to stop giving away our rights and protections in a futile effort to appease Donald Trump."
Leaders in the United States are also encouraging resistance to Trump. U.S. Sen. Chris Murphy (D-Conn.) said Wednesday that "this week you will read many confused economists and political pundits who won't understand how the tariffs make economic sense. That's because they don't. They aren't designed as economic policy. The tariffs are simply a new, super dangerous political tool."
Murphy made the case that "the tariffs are DESIGNED to create economic hardship. Why? So that Trump has a straight face rationale for releasing them, business by business or industry by industry. As he adjusts or grants relief, it's a win-win: the economy improves and dissent disappears."
"But as long as we see this clearly, we can stop him. Public mobilization is working. Today, a few Republicans joined Democrats to vote against one set of tariffs," he added, referring to a
resolution that would undo levies on Canadian imports. "The people still have the power."
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Capitalism Eating Itself by Fueling Climate Mayhem, Warns Capitalist
If humanity stays on current course, warns top insurer, the "financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable."
Apr 03, 2025
A veteran financial consultant and insurance executive is warning his fellow capitalists that their commitment to profits and market supremacy is endangering the economic system to which they adhere and that if corrective actions are not taken capitalism itself will soon be consumed by the financial and social costs of a planet being cooked by the burning of fossil fuels.
According to Günther Thallinger, a former top executive at Germany's branch of the consulting giant McKinsey & Company and currently a board member of Allianz SE, one of the largest insurance companies in the world, the climate crisis is on a path to destroy capitalism as we know it.
"We are fast approaching temperature levels—1.5C, 2C, 3C—where insurers will no longer be able to offer coverage for many" of the risks associated with the climate crisis, Thallinger writes in a recent post highlighted Thursday by The Guardian.
"Meanwhile in the real world—a capitalist declares that capitalism is no longer sustainable..."
With "entire regions becoming uninsurable," he continues, the soaring costs of rebuilding and the insecurity of investments "threaten the very foundation of the financial sector," which he describes as " a climate-induced credit crunch" that will reverberate across national economies and globally.
"This applies not only to housing, but to infrastructure, transportation, agriculture, and industry," he warns. "The economic value of entire regions—coastal, arid, wildfire-prone—will begin to vanish from financial ledgers. Markets will reprice rapidly and brutally. This is what a climate-driven market failure looks like."
Commenting on the Guardian's coverage of Thallinger's declaration, Dan Taylor, a senior lecturer in social and political thought at the Open University, said, "Meanwhile in the real world—a capitalist declares that capitalism is no longer sustainable..."
While climate scientists, experts, and activists for decades have issued warning after warning of the threats posed by the burning of coal, oil, and gas and humanity's consumption of products derived from fossil fuels, the insurance industry has been the arm of capitalism most attuned to the lurking dangers.
"Here go the radical leftist insurance companies again," said David Abernathy, professor of global studies at Warren Wilson College, in a caustic response to Thallinger's latest warnings.
Despite their understanding of the threat, however, the world's insurers have primarily aimed to have it both ways, participating in the carnage by continuing to insure fossil fuel projects and underwriting expansion of the industry while increasingly attempting to offset their exposure to financial losses by changing policy agreements and lobbying governments for ever-increasing protections and preferable regulatory conditions.
In the post, self-published to LinkedIn last week, Thallinger—who has over many years lobbied for a more sustainable form of capitalism and led calls for a net-zero framework for corporations and industries—warned of the growing stress put on the insurance market worldwide by extreme weather events—including storms, floods, and fires—that ultimately will undermine the ability of markets to function or governments to keep pace with the costs:
There is no way to "adapt" to temperatures beyond human tolerance. There is limited adaptation to megafires, other than not building near forests. Whole cities built on flood plains cannot simply pick up and move uphill. And as temperatures continue to rise, adaptation itself becomes economically unviable.
Once we reach 3°C of warming, the situation locks in. Atmospheric energy at this level will persist for 100+ years due to carbon cycle inertia and the absence of scalable industrial carbon removal technologies. There is no known pathway to return to pre-2°C conditions. (See: IPCC AR6, 2023; NASA Earth Observatory: "The Long-Term Warming Commitment")
At that point, risk cannot be transferred (no insurance), risk cannot be absorbed (no public capacity), and risk cannot be adapted to (physical limits exceeded). That means no more mortgages, no new real estate development, no long-term investment, no financial stability. The financial sector as we know it ceases to function. And with it, capitalism as we know it ceases to be viable.
In an interview earlier this year, Thallinger explained that failure to act on the crisis of a rapidly warming planet is not just perilous for humanity and natural systems but doesn't make sense from an economic standpoint.
"The cost of inaction is higher than the cost of transformation and adaptation," Thallinger said in February. "Extreme heat, storms, wildfires, floods, and billions in economic damage occur each year. In 2024, insured natural catastrophe losses surpassed $140 billion, marking the fifth straight year above $100 billion."
"Transitioning to a net-zero economy is not just about sustainability," he continued, "it is a financial and operational necessity to avoid a future where climate shocks outpace our ability to recover, straining governments, businesses, and households. Without decisive action, we risk crossing a threshold where adaptation is no longer possible, and the costs—human and financial—become unimaginable."
Thallinger's solution to the crisis is not to subvert the capitalist system by transitioning the world to an economic system based on shared resources, communal ownership, or a more enlightened egalitarian response. Instead, he proposes that a "reformed" capitalism is the solution, writing, "Capitalism must now solve this existential threat."
Calling for a reduction of emissions and a rapid scale-up of green energy technologies is the path forward, he argues, asking readers to understand "this is not about saving the planet," but rather "saving the conditions under which markets, finance, and civilization itself can continue to operate."
This disconnect was not lost on astute observers, including Antía Casted, a senior researcher at the Sir Michael Marmot Institute of Health Equity, who suggested concern over Thallinger's prescription.
"It would be fine if [the climate crisis] destroyed civilization and maintained capitalism," Casted noted. "They just need to find a way for capitalism to work without people."
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Bernie Sanders Says Defeating Oligarchy Now Most Urgent Issue
"My friends, you don’t have to be a PhD in political science to understand that this is not democracy. This is not one person, one vote. This is not all of us coming together to decide our future. This is oligarchy."
Dec 14, 2024
Sen. Bernie Sanders of Vermont is escalating his fight against the U.S. oligarchy with a new campaign directed at the nation's wealthiest individuals—including Elon Musk, Jeff Bezos, and Mark Zuckerberg—who he says are key culprits in a global race to the bottom that is stripping people worldwide of political agency while impoverishing billions so that the rich can amass increasingly obscene levels of wealth.
Announcing a new series that will detail how "billionaire oligarchs" in the U.S. "manipulate the global economy, purchase our elections, avoid paying taxes, and increasingly control our government," Sanders said in a Friday night video address that it makes him laugh when mainstream pundits talk openly about the nefarious oligarchic structures in other places, but refuse to acknowledge the issue in domestic terms.
"Strangely enough, the term 'oligarchy' is very rarely used to describe what's happening in the United States or in fact, what's happening around the world," said Sanders. "But guess what? Oligarchy is a global phenomenon, and it is headquartered right here in the United States."
Bernie Sanders talks about the oligarchy
While rarely discussed in the corporate press or by most elected officials, argues Sanders, the reality is that a "small number of incredibly wealthy billionaires own and control much of the global economy. Period. End of discussion. And increasingly, they own and control our government through a corrupt campaign finance system."
Since the victory of President-elect Donald Trump in November, Sanders has been increasingly outspoken about his frustrations over the failure of the Democratic Party to adequately confront the contradictions presented by a party that purports to represent the interests of the working class yet remains so beholden to corporate interests and the wealthy that lavish it with campaign contributions.
In a missive to supporters last month, Sanders bemoaned how "just 150 billionaire families spent nearly $2 billion to get their candidates elected" in this year's elections, which included giving to both major political parties. Such a reality, he said, must be challenged.
As part of his new effort announced Friday, Sanders' office said the two-time Democratic presidential candidate would be hosting a series of discussions with the leading experts on various topics related to the form and function of U.S. oligarchy and expose the incoming Trump administration's "ties to the billionaire class," including their efforts to further erode democracy, gut regulations, enrich themselves, and undermine the common good.
"In my view," said Sanders, "this issue of oligarchy is the most important issue facing our country and world because it touches on everything else." He said the climate crisis, healthcare, worker protections, and the fight against poverty are all adversely affected by the power of the wealthy elites who control the economy and the political sphere.
"My friends, you don’t have to be a PhD in political science to understand that this is not democracy," he said. "This is not one person, one vote. This is not all of us coming together to decide our future. This is oligarchy."
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