Protesters hold posters of Ayatollah Khomeini outside the US Embassy, which has been occupied by students following the line of Imam Khomeini, in Tehran, Iran, on November 16, 1979.
Kaveh Kazemi | Halton Archive | getty images
President Donald Trump is adopting a triumphalist tone as he plans to address the nation about the Iran war on Wednesday night. But there is reason to worry that the conflict and its economic consequences for Americans may get worse before they get better. If so, Trump will struggle to rid himself of the war’s damaging political legacy.
In this he will join a long line of US presidents dating back to the 1970s who have seen their tenures defined by an energy crisis and inflation – an economic crisis that Trump has called a “nation-buster”.
“The oil shock of the ’70s was probably born in the subterranean part of our brains,” said Jay Hecks, a presidential historian who led the U.S. Energy Information Administration in the 1990s during the Clinton administration.
“It was a long time coming because it was such a shock. And I think it’s going to be the same kind of shock,” Hecks said.
Gas prices averaged more than $4 a gallon Tuesday for the first time since the war began. gas has followed Brent crude prices It has risen 27% to just over $100 a barrel on Wednesday since the war began. Oil tankers and other commercial vessels that normally travel through the narrow Strait of Hormuz off Iran’s southern coast have been idled due to Iranian threats and attacks. The waterway typically carries 20% of the world’s oil.
But $4 a gallon gas, while painful, may be just the tip of the iceberg. At present this is more evident in the rest of the world than in America. Britain is set to receive its last shipment of jet fuel in the near future this week. Jet fuel prices worldwide have risen 96%, according to Platts data published by the International Air Transport Association. Liquefied natural gas futures contracts in Japan and South Korea have surged 43%, according to FactSet data.
Asia and to a lesser extent Europe face immediate supply disruptions through the Strait of Hormuz. Unlike the US – as Trump has repeatedly pointed out – they buy directly from the Middle East. But all these commodities are linked through global markets. Disruption in one part of the world will quickly spread to other parts. Analysts fear that the price of oil could exceed the record of $150 per barrel set during the Great Recession in July 2008.
So far, the world has benefited from energy supplies that were already in transit when the war began a month earlier, aided by emergency releases from strategic petroleum reserves. But the world is burning through those supplies.
“From the modest estimates we have right now, oil losses in April will be double the oil losses in March,” said Fatih Birol, executive director of the International Energy Agency. podcast Released on Wednesday.
Energy conservation in view of supply disruptions
Governments around the world are trying to encourage energy conservation to combat the crisis. A tracker from the IEA shows 26 governments have taken steps Like Pakistan reducing the speed limit.
Trump has taken steps to encourage the market to improve supply, but has stopped short of calling on Americans to make efforts to conserve energy. Doing so might draw uncomfortable comparisons to President Jimmy Carter’s efforts after the 1979 crisis, which began with the Iranian revolution. Ronald Reagan turned Carter’s call for consumers to restrain themselves into a powerful political weapon, costing him the presidency the following year.
And Trump has spent part of his tenure in the White House demanding limits on construction and subsidies for renewable energy production.
Energy politics has had a huge impact on the country. “We have lost our ability to demand sacrifice from the American people,” Hecks said.
Hundreds of thousands of people gather in Tehran’s Freedom Square, a monument to the first kings, to cheer the motorcade carrying Ayatollah Ruhollah Khomeini, Iranian opposition leader and founder of the Islamic Republic of Iran, upon his return from exile on February 1, 1979, as an uprising against the Shah’s rule spreads across the country.
Gabriel Duval | AFP | getty images
Before Carter, presidents – including Republicans – had invoked the need for shared sacrifice. Following the 1973 Arab oil embargo, President Richard Nixon proposed a national speed limit of 55 mph. It was passed into law the following year, but even before then Nixon had urged people to slow down, “and they did,” Hecks said.
“We still have a little bit of the World War II mentality,” Hecks said.
The energy crisis of the 1970s put the nail in the coffin of that mentality. Nixon and Carter struggled to lower prices and inflation increased. Carter appointed Paul Volcker as Chairman of the Federal Reserve to tackle inflation – which he eventually did, but only by raising interest rates so high as to precipitate a recession, followed by record-high mortgage rates. Of course, Carter was not re-elected.
Americans’ understanding of what government can and should do was permanently changed.
Princeton University historian Meg Jacobs writes in “Panic at the Pump: The Energy Crisis and the Transformation of American Politics in the 1970s”, “The failure of the nation’s politicians to address the energy crisis contributed to Americans’ eroding confidence in their government to solve the problems.”
Jacobs wrote, “If the Vietnam War and the Watergate scandal taught Americans that their president lies, the energy crisis showed them that their government doesn’t work.”
Today, Trump’s premise as president is that the government only works when he is in charge. “No one knows the system better than me, which is why I alone can fix it,” he said at the 2016 Republican National Convention. He has centralized control of the executive branch in the Oval Office, wresting power from Cabinet secretaries and agencies that previously operated autonomously.
Worst-case concerns may not materialize. The US could soon force Iran to surrender, and the global economy could recover rapidly, as it did after the shock of the Russian invasion of Ukraine. But if not, Trump’s decision to go to war in Iran could deepen many Americans’ alienation from their government. And as the sole decision-maker at the top of the federal bureaucracy, Trump will have difficulty convincing the public that anyone other than himself is responsible.