Destruction of Demand for Oil: Why's That So Bad?
What drives Donald Trump to drown us in fossil fuel?
Our subject is oil and our leadership’s love of its use. Consider this comment by Iranian professor Seyed Mohammad Marandi:
Marandi makes several statements:
Trump is emptying the strategic oil reserves to keep U.S. gas prices down.
In doing this, he’s “preventing demand destruction.”
When the strategic reserve is empty, the real price of this war at the pump will hit with a bang.
When that time comes, Americans will rebel against the war and force Trump and his people to ask for an actual peace along Iranian lines.
For the record, what Iran wants now, as explained in this recent discussion (at 5:27), are sanctions relief, return of its frozen (stolen) assets, acceptance of the new reality in the Strait of Hormuz, and a permanent end of the war, including against the Lebanese and Palestinians. Will we get there? My guess is no.
But today let’s focus on the phrase “demand destruction.”
Demand Destruction
“Demand destruction” for a commodity means the destruction of people’s interest in owning it. The automobile, for example, destroyed the demand for horse-drawn carriages and carts.
Demand destruction can occur in several ways. Loss of a supply of something, when there are alternatives, will destroy the demand for the unavailable product. If the earth were suddenly deforested (assume this for the sake of illustration), people would turn immediately to other products for building and making things.
That’s exactly what’s happening to the demand for fossil fuels, or would happen if Trump and other world leaders were to let nature take its full course — “nature” in this case being reduction in oil supply as a result of this war.
For those in the pro-climate camp, who consider climate control their long-term job one, isn’t demand destruction exactly in line with what’s needed in any case?
I understand that without Trump’s oil release from the U.S. strategic reserve, petroleum, which is already priced near $100/bbl, would easily cost $20–$40 more today, with an upper bound close to $200/bbl if Hormuz were to stay closed for an extended period of time.
Trump’s Commitment to Oil
I find all this interesting, given Trump’s total commitment to oil as both an energy source and nostalgia for America-as-was, a world when oil and the nation that owned it were kings — the Happy Motoring life that men like him grew up with and loved.
It’s nostalgia for the old energy source that dooms the old empire when a new energy source and empire arrive to replace it: wind for the Dutch, coal for Great Britain, and oil, certainly, for us.
Demand destruction is a crime in the Trump plan for America, and also, I think, for the 20–30% of his voting base that will stick with him till he dies, or they do, or both.
It’s not just his love of power, his sheer bloody mind, or the cash that fed his campaign that drives his determination to drown us in oil. It’s love of the dying past, by a dying old man. Our leadership class is filled with dying old men.
Not only demand destruction, but too supply destruction too. I doubt that either funds or resources exist to rebuild destroyed oil extraction and refining facilities in the Persian Gulf region.
For me, what is happening today is an extension of COVID. COVID showed that the economy did not depend upon wage slaves seated in their cubicles. This truism is one that rings the death knell for commercial real estate.
Trump and his cronies develop commercial real estate.
For our current capitalist economic system to function we must stay atomized. Precluding public transportation and mixed use development is key for the mythologizing of our rugged individualism. At $7 US a gallon that individualism is not so rugged is it?
Keeping us chained to the car is the number one priority. Expensive upgrades to electrical infrastructure coupled with reduced hour work weeks through sensible social use of AI not so much.
Things have been comfortable for so long that a huge contingent of conventionally smart people have become incapable of adjusting their views. The only way through us the 'Galileo solution' by which the old die out to be replaced by the young.