Paul Krugman smacks down Trump speech with argument that $4 gas is less than half of the Hormuz hit. Here's what he's [View all]

talking about

In a primetime address to the nation Wednesday night, President Donald Trump cast the U.S. effort in Iran as a show of strength. But he left the timeline of the war’s end conspicuously fuzzy, pledging the U.S. would hit Iran “extremely hard” in the coming weeks. Markets didn’t love that ambiguity. Investors recoiled out of fears of an endless quagmire. But Trump tried to quell fears by downplaying the stakes in the Strait of Hormuz, insisting the U.S. doesn’t depend on the critical trade choke point. “The United States imports almost no oil through the Hormuz Strait and won’t be taking any in the future,” he said. “We don’t need it. We haven’t needed it, and we don’t need it.”

But as Nobel laureate Paul Krugman highlighted in a recent Substack post titled “$4 Gasoline Is Less Than Half the Story,” and as many other experts have also emphasized, the strait is essential to not only oil, but trade of some of the world’s most vital resources. Diesel, jet fuel, fertilizer, and plastics are all resources that pass through the Strait of Hormuz—and the war has everyone from oil execs to airline leaders to farmers bracing for fallout from its impacts.

“Less than half of U.S. consumption of petroleum products was gasoline,” Krugman wrote. “Add in soaring costs for fertilizer and feedstocks for plastic, and the surge in gas prices, even though it dominates headlines, is well under half of the economic story.” Those inputs are crucial for everything from the food on your grocery shelves to the shopping bags that carry them.

The impact of rising gas prices isn’t just in the headlines; it’s flashing in giant digits at more than 150,000 gas stations nationwide, where prices have steadily climbed past $4 a gallon. While Trump claims the U.S. isn’t reliant on the Strait of Hormuz, roughly a fifth of the world’s oil and natural gas supply passes through it daily. And so do other resources critical to the American consumer. The U.S. is a top producer of gasoline. But even ignoring the reality of skyrocketing gas prices, a prolonged closure of the Strait of Hormuz could hurt Americans’ pocketbooks in many other ways, according to Krugman.

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