The US is to Cuba, as Iran is to the US

The economic low-oil light is on.

Remember the analogies on the SAT? The question would give you two words, and then you’d have to match their relationship with two other words. For example, puppy is to dog, as kitten is to cat.

We Gen Xers used to hate the analogy section of the SAT, but I was reminded of it recently by unfolding parallel world events. First, Cuba announced that it is out of oil. The island nation received most of its oil from Venezuela and has not received shipments from that nation since January, following the US raid that captured Nicholas Maduro. Most other oil deliveries have been inhibited by the Trump Administration’s blockade aimed at regime change.

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Now, the Cuban government says that the island is completely out of oil and diesel fuel. Compounding the problem, the electrical grid is teetering, with rolling blackouts lasting as long as 22 hours per day in some areas. The irony here is that US policy towards Cuba is something that would trigger the ire of the United States if someone else did it.

The manmade energy crisis may bring about regime change in Cuba, or it might make the country vulnerable to a US invasion, the US is reportedly considering indicting Raul Castro, but there are costs. There is a humanitarian crisis from shortages of energy, food and water that includes a skyrocketing infant mortality rate that is an obvious, painful cost of the blockade. The tarnishing of America’s image in Latin America at a time when China is making inroads into the Western Hemisphere is less obvious, but no less important.

But even more alarming is that Iran is doing to us what we are doing to Cuba. Oil and gasoline prices have risen as Iran continues to control access to the Persian Gulf, but so far we have not seen shortages. That may change within a few weeks.

For the past few months, the world economy has relied on previously-shipped inventories of oil along with newly-pumped oil from other areas. Those inventories have steadily declined, including the release of 172 million barrels from the Strategic Petroleum Reserve, which, for context, puts the total contents of the SPR at less than 375 million barrels. Oil prices have remained relatively low on market hopes of a diplomatic solution to the crisis in the Strait of Hormuz that so far, has not come.

Industry experts predict that, without a resolution, the “low oil“ light for national economies could start to blink red by the end of June. Hamad Hussain, climate and commodities economist at Capital Economics, told Fortune that oil prices might follow a “non-linear” path to $130-140 per barrel if the Iranian blockade is not resolved soon. Read that as a sudden, near-vertical spike in oil prices. Such a spike could lead to efforts to reduce demand, such as rationing, or panic buying.

In other words, we may only be a few months behind Cuba.

One of the first commodities where consumers feel the pinch may be motor oil. There are reports of leaked internal memos from Autozone, Toyota, and Nissan that indicate the companies are already preparing for potential shortages of motor oil. If you remember the Great Toilet Paper Panic of 2020, you already have an idea of what a motor oil shortage might look like, but at least oil changes can be postponed.

Jet fuel shortages are also looming for the summer, particularly for Europe, where much of the go-juice is imported. While it’s unlikely that the airlines will run out of fuel, the summer travel season may come with flight cancellations and increased ticket prices.

All this is already on top of gasoline prices that are already high and climbing higher. The US is already flirting with its record-high gas price of $5.02, set on June 14, 2022, in the aftermath of the Russian invasion of Ukraine. Adjusted for inflation, the highest price was $4.05 gallon during the 2008 recession, the equivalent of $6.02 today.

And with higher energy prices comes higher everything else. Energy is used to produce and transport other products from food to furniture and clothes to cars. The energy-driven inflationary price increases are a hidden tax inside the cost of everything we buy.

It’s unlikely that the US will completely run out of fuel like Cuba has, but we will feel a similar pinch unless the Strait issue is resolved soon. That, in itself, is unlikely. Either Trump buckles and makes a deal favorable to Iran or launches a massive, costly, long-term invasion and occupation of thousands of square miles of Iranian coastline. It’s a rock-and-a-hard place scenario, and the president will delay committing to either option as long as possible.

Trump is caught between wanting to resolve the Iran crisis successfully and not wanting to look weak, start a protracted war, or crash the global economy. The conundrum seems to have him stuck in a loop of threatening and then postponing severe consequences to the Iranian regime, hoping each time that Iran will fold.

At some point, however, the economic damage is going to reach a point where he either has to admit defeat or go all in. That decision point may be reached when oil reserves get catastrophically low and prices start to spike again as fears of shortages mount. After all, the US military needs oil to prosecute a war against Iran.

And there is the possibility that Cuba will also turn hot. As the situation on the island becomes increasingly desperate, the Cuban government may make a move that Trump could use as a pretext for an invasion. Axios recently reported that Cuba has amassed hundreds of drones over the past few years. These drones might be used in an attempt to break the blockade, or they might be used defensively against the US base at Guantanamo Bay or targets in Florida if the US attacks.

Ultimately, it may be up to Congress to resolve both crises. A bipartisan group of war critics has come very close to passing a war powers resolution that could end or severely restrict Trump’s authority to unilaterally wage war on Iran. As economic catastrophe and midterms loom, more Republicans might break ranks with the president. The growing number of Republican incumbents successfully primaried by Trump-endorsed challengers may change the math of war powers politics.

On Cuba too, Congress needs to act to prevent yet another war that could overextend the US military and critically deplete stocks of munitions. Congress needs to make clear to the toddler-in-chief that he can’t have another war until he finishes his last one.

ILLEGAL ALIEN Donald Trump posted a picture of himself with a shackled ET to Truth Social.

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