There is no way to get around it. We are facing a major global economic disruption, and the longer this war goes on the worse it will get. As I have reminded my readers on numerous occasions, our entire way of life is predicated on cheap energy, and the Middle East is the most important energy producing region in the entire world. Traffic through the Strait of Hormuz has been paralyzed, and energy infrastructure has been under attack by both sides. In fact, this morning Tehran was “covered in thick black clouds of smoke” after a refinery and multiple oil depots were destroyed…
Even if traffic through the Strait of Hormuz was restored tomorrow, and that is not going to happen, the damage that has been done to energy infrastructure throughout the Middle East would take many months to repair.
It would be difficult for me to overstate the severity of the disruption that we are currently witnessing.
In neighboring Iraq, oil production has already fallen by 70 percent since the start of the war…
Oil production in Iraq has fallen by 70% since the war broke out, according to Reuters. The country is producing about 1.3 million barrels per day now, down from about 4.3 million before the war. Kuwait, another oil-rich Gulf state, has also slashed its oil production.
Unfortunately, production is also way down in Saudi Arabia, Qatar and other nations in the region.
Most people living in the western world have no idea what this is going to mean.
The average price of a gallon of gasoline in the United States has soared over the past 10 days, but this is just the beginning…
According to AAA, the average price for regular unleaded fuel in Maryland on Saturday was $3.46 per gallon. This time last week, the price was $2.94.
The price of fuel in Maryland was above the national average. The country’s average on Saturday was $3.41 per gallon of regular gas.
Maryland ranked 10th out of the 50 states and Washington D.C., for the most expensive regular fuel prices. California has the highest prices, with its average being $5.07 per gallon.
Of course the price of gasoline affects the price of so many other things that we regularly purchase.
We have already been experiencing a seemingly endless cost of living crisis, but now we could see prices escalate to an entirely new level.
The energy minister of Qatar, Saad al-Kaabi, is warning that the war in the Middle East “will bring down the economies of the world”…
“This will bring down the economies of the world,” Saad al-Kaabi, Qatar’s energy minister and CEO of its state-owned energy company, told the Financial Times on Friday. “If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody’s energy price is going to go higher.”
Qatar, like all of the major oil and gas exporters along the Persian Gulf, has had to almost entirely halt shipments over the past week. Tanker traffic through the Strait of Hormuz that links the Gulf to the rest of the world has been at a standstill as operators fear attacks and insurance companies cancel war coverage.
We are in far more trouble than most people realize.
Even before this war with Iran erupted, the employment numbers in the U.S. were moving in a very troubling direction.
In fact, the BLS is telling us that the U.S. economy actually lost 92,000 jobs during the month of February…
The U.S. economy lost jobs in February, a month marred by severe winter weather and a strike at a major health-care provider, the Bureau of Labor Statistics reported Friday.
Nonfarm payrolls fell by 92,000 for the month, compared with the estimate for 50,000 and below the downwardly revised January total of 126,000. February marked the third time in the past five months that payrolls declined, following a sharp revision showing a drop of 17,000 in December.
Read the last sentence of that quote again.
The U.S. has now lost jobs in three of the past five months.
We haven’t experienced a stretch like this since the early days of the pandemic.
And every day even more major companies announce new layoffs.
For example, Capital One has decided to give the axe to 1,139 employees in Illinois…
Capital One has announced major layoffs that will affect 1,139 employees in an office in Riverwoods, Illinois, according to multiple reports.
Perhaps if Capital One wasn’t spending so much money bombarding us with obnoxious commercials they wouldn’t have to let so many workers go.
We are also being told that Oracle is “gearing up to cut thousands of jobs”…
Oracle is reportedly gearing up to cut thousands of jobs in order to fund AI data centers. According to a widely cited report in Bloomberg, the tech giant is facing a cash crunch as it looks to massively expand its AI data center operations.
Oracle was supposed to be one of the big winners of the “AI boom”.
Sadly, the “AI boom” is rapidly turning into the “AI bust”, and that is going to have enormous implications for all of us.
As the cost of living rises and the employment market gets tighter and tighter, ordinary Americans have less money to spend.
According to CNN, U.S. retail sales unexpectedly fell in January…
That comes as spending itself is already hitting a rough patch: Retail sales declined 0.2% in January from the prior month, the Commerce Department said Friday, the biggest decline since May. January’s reading came in below expectations of 0%, according to a poll of economists by data firm FactSet. The figures are adjusted for seasonal swings but not inflation. The report was delayed a few weeks because of last year’s government shutdown.
This is such a tough time to be in the retail business.
Thousands of stores have been closing all over the nation, and most of our once thriving shopping malls are either dead or dying…
A ‘dead’ mall in the Bay Area has taken its next victim – and customers are heartbroken.
Barnes & Noble announced it will close its branch in the Shops at Tanforan – a mall that just last year was slammed with the closure of another staple, JCPenney.
In fact, only a few stores remain open at the Shops at Tanforan, including a jeweler, a bridal shop and a cell phone store. There’s still a Target and Starbucks at the mall, as well as a Chipotle in the food court.
Now that we are engaged in a major war in the Middle East that is massively disrupting global trade, economic numbers all over the world are likely to deteriorate dramatically in the months ahead.
In addition to potentially facing the worst energy crisis in more than 50 years, we are also potentially facing a historic fertilizer crisis.
Normally, one-fourth of all nitrogen fertilizer that is traded globally goes through the Strait of Hormuz.
If this war does not end quickly, we could soon see a worldwide food price shock that will hit impoverished countries extremely hard.
So let us hope for the best, but let us also get prepared for the worst.
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