Today, our motorists will be met with sharply higher prices at the pumps. Life becomes a little more miserable.
The recent jump in oil prices is a consequence of two weeks of heavy US bombardment of Iran. We have not been benefitted by a proper briefing on what those attacks were all about and what strategic gains were hoped. There has been no proper declaration about the state of the ceasefire signed with much fanfare only last June.
These attacks are a measure of American arrogance. Washington thinks it is entitled to bomb any country that annoys it. They have done that many times – and the whole world pays for the consequences.
In response to the US attacks, Iran waged a strong counteroffensive targeting US military facilities throughout most of the Middle East. A significant number of US aircraft were destroyed in their Jordan bases. Casualties were reported.
Iran closed down traffic at the Strait of Hormuz once more, limiting the outflow of oil supplies. In addition, the Houthis decided to close down the Bab al-Mandeb strait at the mouth of the Red Sea. This further limits the flow of oil supplies to the global economy.
Reflecting the shutdown of two strategic passageways, crude prices rose sharply. Brent crude traded around $100 per barrel the past week. Higher oil prices will echo down the line, including in the US where gasoline is now back to $4 per gallon.
If it was Trump’s idea to bomb his way towards forcing open the Strait of Hormuz and reducing oil prices in time for the crucial US midterm elections, the opposite happened. Oil prices spiked and will likely remain elevated for months to come. Trump’s Republican Party will likely be punished by the voters next November.
Meanwhile, the world will have to suffer from the chain of bad news more expensive oil brings. Inflation will continue to pester all the world’s economies. There will be more breakages in the supply chains. There will be lower economic growth everywhere.
The Philippines remains most vulnerable to the price uncertainties. Because of the inefficiencies in our logistics, oil products are more expensive for Filipino consumers. In addition to paying more for oil, Filipino consumers now pay the highest power rates in all of Southeast Asia.
Instability in the Middle East will be a continuing scourge for Filipino consumers. Our inflation rate will remain high. Our currency will remain weak. Poverty incidence will continue to increase.
Over the weekend, the US inexplicably halted their bombing campaign against Iran. The campaign started without warning and then ended without any perceptible strategic gain. Donald Trump did not consider it his responsibility to appraise the world about what was happening.
The word in Washington is that some of Trump’s most senior advisers warned him continued escalation of the conflict was unsustainable. America’s overpriced armaments have been seriously depleted in the course of the capital-intensive military action against Iran. In the event another war breaks out elsewhere in the world, the US military will not have enough weapons to effectively respond.
It might seem strange that what has been touted as the world’s most powerful military organization would suffer weapons shortages. But the US has a strange, inefficient way of arming its military. It contracts out weapons production to private suppliers on a weapon-to-weapon basis.
In the course of the military campaign against Iran, American military planners realized they were expending weapons faster than they could replace them. In the current set-up, it will take years to bring back US strategic weapons stockpile to the pre-Iran war level.
America’s weapons shortage was aggravated by Iran’s asymmetrical war strategy. A Patriot missile, for instance, costs about $3 million apiece. When a $20,000 drone strays into protected airspace, three missiles are usually fired to stop it. The cost equation does not make sense. Each time US forces shoot down an Iranian drone, America spends disproportionately more than Iran.
In addition, the US has lost the industrial base to sustain weapons production at scale. Iran, by contrast, produces thousands of cheap weapons each week. This enabled Iran to quickly restore its weapons stockpile to what it was before Feb. 28.
In a word, the US does not have what it takes to sustain a shooting war in the Middle East. The global gunslinger is short of ammunition. It is embarrassing but true.
America’s weapons predicament disables the declining superpower’s capacity to decisively resolve the conflict it initiated. The stage is set of another “forever war.”
A stalemate between the US and Iran, however, will be harmful for the rest of the world. The prolonged uncertainty will keep oil prices high. Expensive oil will tax global economic performance. This will bring even more misery to the poor countries.
Donald Trump created this problem. Now he finds he has no means to solve it.
And what does he do? He imposes new tariffs on every nation the US trades with. That impoverishes poor developing economies like the Philippines.
The Philippines is among the worst impacted by the mindless geopolitics Trump pursues. We are almost totally dependent on imported energy. We have failed to make our economy more efficient and future-ready. We have installed irresponsible political leaders whose looting made us all the more vulnerable.
We are trapped between a clown in Washington and a kleptocracy at home.