The Strait Of Hormuz Crisis Exposes A Fatal Flaw In Economic Thinking

A priest, an engineer, and an economist are stranded on a desert island. The first order of business is to get some food. The priest suggests that they all pray. The practical-minded engineer suggests that the three men make a net to catch some fish. But where will they find the necessary materials? The priest and the engineer turn to the economist and ask him if he has any ideas. The economist replies, “Assume a fish.”

This well-worn economist joke summarizes one of the chief flaws in contemporary economic theory.

That theory almost completely ignores the role of physical resources, assuming they will always be available in the quantities we need at prices we can afford at the time we need them. When those resources aren’t available, that theory begrudgingly accepts that there will be some damage to economic activity, but tends to greatly underestimate the impact.

This conceptual flaw explains why economists in most financial institutions and governments, and thus investors, are not especially alarmed at the loss of energy resources, as stock market indices remain not too far from their recent highs.

For a good summary of how contemporary economic theory goes off the rails, Australian economist Steve Keen offers a mercifully brief and comprehensible explanation. Here I will relate one critical part of that explanation. About 5.7 percent of U.S. GDP is devoted to procuring and distributing energy. Most economists will tell you that a 10 percent decline in energy availability would have a small effect on the U.S. economy. They would take the percentage of the economy devoted to energy, in this case 5.7 percent, and multiply it by 10 percent to arrive at a 0.57 percent reduction in economic activity.

This conclusion is utter nonsense and not even close to what the effects would be.

The reason is that energy is the master resource. It cannot be treated like other resources. Energy is the resource that makes all other resources available. Nothing gets done without energy. The correlation between economic activity and energy use is 0.9 (where 1.0 represents a perfect correlation). This should come as no surprise. When the economy is growing, energy use grows with it as energy fuels the economic activity that pushes growth.

What this implies is that a 10 percent reduction in energy availability is much more likely to result in a decline in economic activity closer to 10 percent than to one-half percent.  For comparison, the real GDP of the United States fell 4.3 percent during the Great Recession, which lasted from December 2007 through June 2009.

So, how much energy is currently being denied to the global economy by the closure of the Strait of Hormuz? No one knows for certain. We do know that liquefied natural gas (LNG) exports from Qatar were previously transiting through the strait. And, close to 20 percent of the world’s oil supply was also passing through the strait on a daily basis.

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Navy’s Green Laundry Initiative Weakened A $15 Billion Carrier

The $15 billion USS Ford was forced to cut short its deployment due to a 30-hour laundry fire that did millions of dollars in damage. And it has been revealed that even while it remained on station in the Gulf, Ford could not generate combat sorties for two days due to the raging 30-hour laundry fire that drove some 600 sailors out of their sleeping quarters. Thirty hours to get a laundry fire under control raises a couple of questions. Why would a laundry catch on fire, and why did it take the firefighters and damage-control personnel of the USS Ford so long to put out the laundry fire? Sadly, the answers can be found in some wrongheaded decisions the Navy made in its effort to be viewed as being “green.”

Design for the Ford-class carrier began in March 1996, and finally, more than $15 billion later, the USS Ford was fully certified for combat in April 2023. Due to a misguided green initiative, instead of installing inherently super energy-efficient steam-based laundries, the Ford-class carriers have standardized on more expensive, more complex, inherently fire-prone, ozone-based systems.

The green reason for these systems is that they supposedly save energy and water by being able to operate with cold water only, while also needing 30 percent less water than the steam-based systems the U.S. Navy has historically relied on. A Jan. 12, 2012, Navy memo made this revealing statement:

“Ozone technology is increasing the earth-friendly aspect of shipboard laundering and moving navy laundries towards a ‘greener’ process. Good for the sailor… good for the ship… good for the earth!”

This sure sounds wonderful, but just a bit of analysis shows that the ozone-based laundries, like so many of the U.S. military’s so-called green initiatives, actually weaken our military while costing more than the mechanically robust, battle-tested systems they replace.

First, it must be pointed out that when you look at the energy budget of a typical warship, including propulsion, less than 1 percent of the warship’s total energy budget is expended on freshwater production and laundry services, with the vast majority of energy being used for the ship’s propulsion and the rest of the systems described by the Expanded Ship Work Breakdown Structure for Navy ships.

What’s more, the annual cost for producing fresh water on our entire fleet of Navy ships is just $22 million, and the water for the laundry is a fraction of this. Further, every Navy ship can produce far more fresh water than it needs for its average daily use. For example, both Ford- and Nimitz-class carriers can produce double the average amount of water needed daily. Getting more specific, installing an ozone-based laundry on an Arleigh Burke destroyer, which uses gas turbines instead of steam turbines, does result in a 30 percent reduction in energy used by its laundry system, including the energy savings from reduced freshwater desalination. But with laundries consuming less than 1 percent of ships’ overall energy consumption (including propulsion), this would result in less than 0.3 percent energy savings. All other things equal, that might make sense, especially if the systems were built into the ship from the outset. But the ozone-based systems cost more, require more ongoing maintenance, are more dependent on expensive shore-based vendor support to keep them operational, and are built around a potent oxidizer—ozone.

Finally, the ozone-related laundries end up creating a much drier environment than the moist atmosphere created by steam-reliant systems. It was the drier environment that helped create the extremely dry lint that caused the Ford laundry room fire. And these high-tech laundries require very expensive, corrosion-resistant piping, fittings, and seals, along with 24/7 monitoring to ensure the highly corrosive, lung-irritating, fire-accelerating ozone does not find its way past the specialized, very expensive seals. So, even for ships that rely on gas turbines or marine diesels, such as our Navy’s destroyers and some of our larger warships, the case for ozone-based systems is highly debatable, to say the least.

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Widespread Rationing And Global Energy Shortages Are Baked In No Matter When The War Ends Now

It is difficult to believe the pace at which global events are now moving. Apocalyptic threats are being thrown around recklessly and severe damage is being done to the global economic system every single day. A lot of people still seem to think that economic conditions will snap back to normal once the war ends, and that is because they don’t understand the level of destruction that has already taken place. Even if the war ends tomorrow and commercial traffic starts flowing freely through the Strait of Hormuz once again, the world won’t be getting nearly as much energy from the Middle East because dozens of oil and natural gas facilities have either been damaged or destroyed. That means that widespread rationing and global energy shortages are baked in no matter what happens next.

According to the executive director of the IEA, 75 energy sites in the Persian Gulf region have been attacked, and approximately a third of those sites have experienced severe damage

It is going to take years to rebuild the damage that has already been done by this war.

So what will things look like if this war stretches on for many more months?

Tankers that traveled through the Strait of Hormuz before the war began have still been arriving at their destinations.

But this month that is going to stop happening, and Birol is warning that we are entering a “black April”

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Report: China Supplying Iran with Anti-Aircraft Weapons to Aid in Fight Against US

A new report revealed that American officials believe China is helping Iran in the war with the United States and Israel.

According to The New York Times, U.S. intelligence agencies believe China sent shoulder-fired missiles to Iran. The weapons can be used to down low-flying planes.

The report said the intelligence has some uncertainty, and it is also not clear if Chinese missiles were used in Iran’s recent attacks on U.S. or Israeli targets.

The report said American officials believe China, which heavily controls its private sector, is allowing chemicals, fuel, and parts for weapons to be sent to Iran.

The report noted that sending missiles to America’s foe “would be a significant escalation and an indication that at least some of China’s leaders are working actively to bring about an American military defeat in a war that has engulfed the Middle East.”

CNN report indicated that China is planning to send the missiles to Iran, and will route them through a third-party nation to cover up the shipment’s origin.

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Can’t bomb your way out of a logistical bottleneck

When officials from the United States and Iran walked away from negotiations in Pakistan this weekend with no deal on the Strait of Hormuz, markets didn’t wait for clarity. They reacted. The subsequent announcement by United States Central Command of a naval blockade targeting Iranian ports was meant to reassure. Instead, it raised more questions than answers.

Markets, as they often do, may be reading this correctly.

The Strait of Hormuz is not just another geopolitical hotspot. It is one of the most critical arteries of the global economy. Roughly 20% of the world’s oil and close to 30% of globally traded fertilizers pass through that narrow corridor. When flows are threatened, the consequences extend far beyond energy markets. They move quickly into agriculture, food production, and ultimately, the prices Canadians pay at the grocery store.

Oil prices are now back above $100 USD per barrel, but the real story began months ago. Markets started pricing in Middle East risks early in the year. In the food economy, there is typically a six- to nine-month lag between energy shocks and retail food prices. That means the inflationary pressure we are beginning to feel today was already set in motion weeks ago.

For Canadian consumers, it is already too late to avoid it.

The first signs are now emerging across the food system. Transport companies, facing extraordinary volatility, are reintroducing fuel surcharges and adjusting contracts upward. Suppliers are hedging aggressively. These costs do not stay within the supply chain—they get passed along.

Fresh produce will be among the first categories to reflect this shift. Fruits and vegetables rely heavily on long-distance, temperature-controlled transport, making them highly sensitive to fuel costs. Canadians should expect price increases in the range of 5% to 15% over the coming months, particularly for imported items. Meat and seafood will follow. These products are energy-intensive at every stage—from feed production to processing and refrigeration—and are likely to rise by 5% to 10%, with beef leading the way.

Dairy products will also move higher, though more gradually, as rising energy costs affect processing and distribution. Increases of 4% to 8% are likely over the next few quarters. Even staples like bread and cereals will not be spared. Fertilizer markets, closely tied to energy flows through the Strait of Hormuz, will push grain production costs higher, resulting in price increases of 3% to 6%. Processed foods, exposed to energy at multiple stages, will also climb steadily.

These are not isolated adjustments. They reflect a broader reality. Historically, a sustained rise in oil prices adds between one and three percentage points to food inflation in Canada. Under current conditions, grocery inflation could easily climb back toward 6% to 8%. For households, that translates into real money. Every sustained 25% increase in oil prices typically adds $150 to $200 annually to the average grocery bill. With oil already surging, the total impact could be several hundred dollars per family.

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How Many People Have the US and Israel Killed in Iran?

After the breakdown of talks in Pakistan, the ceasefire between the US and Iran is more fragile than ever, and now seems likely to give way to a new phase of the war. The ceasefire and talks have failed to end Israel’s devastating attacks on Lebanon or to negotiate international access to the Strait of Hormuz, now under Iran’s control.

The world must use this pause in the war to push for a permanent ceasefire and peace agreement, but we must also start to assess the true human cost of the war–something the US is always reluctant to do in its wars, from Vietnam to Iraq to Afghanistan. While we always know the exact number of Americans killed in these wars, we never have an accurate tally of how many people we have killed–not only because it is often hard to get the data, but also because the US systematically downplays civilian casualties and treats their lives as less valuable.

We saw this from the very first day of this war. The US carried out a double-tap strike on a girls’ elementary school in Minab, killing 175, mostly young girls. Trump’s response was to blame Iran: “In my opinion, based on what I’ve seen, that was done by Iran,” he said, and later suggested that Iran might have gotten hold of a Tomahawk missile and used it to kill its own people.

Minab is not an isolated case – it is a window into a much broader failure by the US government and media, as well as the Iranian government and international media, to honestly reveal the human toll of this 40-day war.

The Iran Health Ministry’s casualty figures have not been updated in any detail since March 29, when it put Iranian casualties at 2,076 killed and 26,500 wounded, and there is an obvious mismatch between these two numbers. The ratio between them is much higher than in other wars, or even when compared with the Israeli assault on Lebanon in this war, where Lebanon’s Health Ministry reported 1,830 people killed and 4.927 wounded by April 10, a ratio of 2.7 to 1 between the wounded and the dead.

For further comparison, UN figures for civilian casualties in the war in Ukraine are 15,172 and 41,378 wounded, which is also a ratio of 2.7 to 1. These are certainly under-estimates, like civilian casualty counts in every war, but the ratio between deaths and injuries is realistic, unlike that in Tehran’s casualty figures.

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Ukrainian Forces Say They Captured Russian Positions With Drones And Robots – Terminator Is Here?

In a significant milestone for unmanned warfare, Ukrainian forces have for the first time seized a Russian position exclusively with drones and unmanned ground vehicles (UGVs), without deploying any infantry or sustaining casualties, President Volodymyr Zelenskyy announced on Monday.

“For the first time in the history of this war, an enemy position was taken exclusively by unmanned platforms—UGVs and drones. The occupiers surrendered, and this operation was carried out without the participation of infantry and without losses on our side,” Zelenskyy said in a statement.

The president hailed the operation as a breakthrough in modern combat tactics, emphasizing Ukraine’s accelerating shift toward high-technology systems to minimize risks to troops. He noted that various robotic platforms—including the Ratel, Termit, Ardal, Lynx, Snake, Protector, and Volya—have conducted more than 22,000 missions in the past three months alone, often venturing into the most hazardous areas in place of soldiers, reported SOFX.

“Lives were saved more than 22,000 times—a robot went into the most dangerous areas instead of a soldier. This is about high technologies in defense of the highest value—human life,” Zelenskyy added.

Ukraine’s Ministry of Defense has reported a dramatic surge in UGV deployments on the front lines. In March 2026, the systems completed more than 9,000 missions, up sharply from roughly 2,900 in November 2025. Across the first three months of 2026, UGVs carried out approximately 24,500 missions in total. The number of units actively employing the technology has also grown significantly, rising to 167 from 67 the previous year.

The latest success builds on earlier demonstrations of unmanned systems in combat and support roles. In June 2025, Ukrainian forces used the Ardal UGV to evacuate wounded personnel from forward positions. Unmanned platforms have also assisted in rescuing captured Ukrainian soldiers with drone support and have been deployed in non-combat humanitarian efforts.

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Five hundred more pro-Palestine protesters arrested in UK despite High Court ruling

Another 523 arrests were made in Britain on Saturday of people carrying placards with the words: “I oppose genocide; I support Palestine Action”.

The protesters were participating in Saturday’s “Everyone” demonstration in Trafalgar Square, London, organised by civil liberties organisation Defend Our Juries, challenging the ban on direct action group Palestine Action. Their ages ranging from 18 to 87 years old, demonstrators were all arrested under counter-terror laws on suspicion of indicating support for a proscribed organisation.

Over 3,300 people have now been arrested on these charges during various protests since Palestine Action was outlawed by the Labour government in June-July last year.

The latest mass roundup takes place after the UK’s High Court has ruled the proscription of Palestine Action unlawful. The government’s appeal is due to be heard this month, on April 28 and 29 and the arrests are clearly meant to back an overturn of the original verdict.

A Defend Our Juries spokesperson commented, “The Met are choosing to make arrests despite the government’s ban on the group being ruled unlawful by the High Court, and leading lawyers warning that any arrests would be unlawful.”

This criticism was echoed by Tom Southerden, Amnesty International UK’s Law and Human Rights Director, who said, “Today’s mass arrests of peaceful protesters in Trafalgar Square under UK terrorism law are yet another blow to civil liberties in this country—and made all the more outrageous by the Metropolitan Police’s own U-turn.

“The High Court ruled in February that the proscription of Palestine Action was unlawful. The Met rightly said it would stop making arrests.”

The about turn took place on March 25, with the Met issuing a statement claiming it had only paused arrests while it became clear whether the government would be granted the right to appeal.

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US & Israel Bomb 307+ Medical Facilities In Iran Carrying On Long Tradition Of Targeting Medical Workers

The United States and Israel are systematically targeting hospitals in Iran. In one month of bombing, the two countries have hit at least 307 health centers across the country, according to reports from the Iranian Red Crescent. The carefully planned destruction of the Islamic Republic’s medical infrastructure fits into a long history of deliberate U.S. attacks on hospitals. Since the end of World War Two, Washington has targeted medical centers in at least 16 countries, and the 307 Iranian sites hit does not even come close to the record for the number of hospitals in any country destroyed by American bombs and missiles.

Iranian Destruction

There was no warning. U.S. and Israeli airstrikes hit Gandhi Hotel Hospital in northern Tehran on March 1, and again on March 2. Locals were fasting for Ramadan as missiles tore into the building, shattering glass and wrecking its neo-natal unit and ICU. Completed in 2009 and described as “beacon” of Iranian medicine and one of the most advanced medical centers in West Asia, the 17-storey building was among the country’s most important hospitals. Images of the aftermath show a once proud building in ruins, with floor after floor devastated. Gandhi Hotel Hospital is one of more than 300 medical centers that have been hit by U.S. and Israeli strikes. Nine days afterward, on March 11, the Persian Gulf Martyrs Educational and Medical Center in Bushehr on Iran’s southern coast was targeted and severely damaged.

Missile explosions destroyed much of the hospital’s medical equipment. Even as the glass was still falling, authorities made the decision to rush patients to the nearby Nuclear Scientists Martyrs Hospital, despite the fear of a double-tap strike, like the ones often seen in Israeli attacks on Palestine. On March 21, the Imam Ali Hospital in Andimeshk, Khuzestan Province, was targeted. Video footage from the aftermath of the attack shows wards, waiting rooms, and corridors completely devastated, with both walls and roofs collapsing under the strain of U.S./Israeli bombardment.

The Imam Ali is Andimeshk’s only hospital, and patients were forced to be bussed to healthcare facilities in other cities, according to Hossein Kermanpour, head of public relations for the Iranian Ministry of Health. I wish [Donald Trump and Benjamin Netanyahu] understood that this is a crime against humanity,” he said.

Other medical infrastructure, including a first responders’ center, an Iranian Red Crescent office, and the Pasteur Institute, a medical research laboratory, have also been hit. “What message does attacking hospitals, pharmaceutical companies and the Pasteur Institute as a medical research center in Iran convey?” asked Iranian president Masoud Pezeshkian; “As a specialist physician, I urge WHO, the Red Cross, Doctors Without Borders and physicians worldwide to respond to this crime against humanity.”

The attacks have been largely ignored by Western media. Few newspapers or TV news reports have even mentioned the damage to the country’s healthcare system, let alone centered it as a major news story.

The U.S.’ Long History of Bombing Hospitals

President Trump has a history of targeting medical facilities. Last year, U.S. forces carried out 14 separate airstrikes on the Al Rasool Al-Azam Oncology Hospital in Saada, Yemen, the centerpiece of the country’s healthcare network. For a full investigation into the attack, and the U.S.’ long history of targeting civilian medical infrastructure around the world, see the MintPress News report:

“With Yemen Attack, U.S. Continues Long History of Deliberately Bombing Hospitals.” Repeated attacks against hospitals is more of a pattern than an aberration for Trump. In 2017, the U.S. carried out 20 strikes against a hospital in Raqqa, Syria, using white phosphorous munitions to do so, killing at least 30 civilians in the process.

Trump’s predecessor, Barack Obama, was not less fond of targeting healthcare facilities. In 2015, his administration ordered a bombing campaign against a Doctors Without Borders hospital in Kunduz, Afghanistan. The building was one of the largest and most recognizable in the city, and an internal inquiry found that the airmen aboard the gunship pushed back against the order, citing its illegality. They were overruled and forced to carry out the strike, killing at least 42 people. Obama’s attack on Doctors Without Borders marked the only time in history that one Nobel Peace Prize winner has attacked another one. During his time in office, Obama bombed seven countries, including Libya, where U.S. planes struck a hospital in Zliten, leveling it completely. At least 11 people were killed in the operation.

Perhaps no nation on Earth has felt the impact of American power in the 21st century as badly as Iraq. Successive administrations attacked critical infrastructure there, including in 2003, when President Bush bombed the Red Crescent Maternity Hospital in Baghdad. While many were killed in the strike, the real death toll, as UNICEF noted, was far higher, as with no medical care, maternal mortality spiked after the attack. The 1990s is often remembered in the West as a time of peace. Yet President Clinton used the period to target medical infrastructure in three separate countries. In Yugoslavia, U.S. planes bombed a number of hospitals, including dropping now-banned cluster munitions on a facility in Niš, killing at least 15 people.

In Somalia in 1993, U.S. soldiers carried out a mortar attack against the Digfer Hospital in Mogadishu, destroying the building’s main reception area. They then proceeded to bomb the journalists attempting to cover the incident. Meanwhile, in Sudan, Clinton ordered a hit on the Al-Shifa medicine factory in Sudan. Fourteen cruise missiles pounded the plant, turning what had been the largest producer of medicine in the country into a pile of twisted metal. The German Ambassador to Sudan estimated that, without the antibiotics, antimalarials, and other drugs it produced, the true death toll of the strike was in the “tens of thousands.” Few Americans know about this incident. The 1980s were a dangerous time to be a doctor in a country designated for regime change.

The U.S. invaded Grenada in 1983, in order to put an end to the socialist revolution on the Caribbean island. In the process, it bombed the Richmond Hill Mental Hospital, killing dozens. In El Salvador, U.S.-backed death squads flying in American aircraft stormed a hospital in San Ildefonso, killing five people. Paratroopers also kidnapped, raped, and tortured the staff, including French nurse Madeleine Lagadec, causing a major diplomatic incident. Between 1981 and 1984, at least 63 health centers in Nicaragua were forced to close, due to attacks from U.S.-backed and trained “Contra” death squads, whom President Reagan labeled “the moral equivalent of our Founding Fathers.”The violence meted out on Asia by the U.S., however, was on another level entirely. Bombing hospitals was official (if unstated) policy. “The bigger the hospital, the better it was,” said former Army intelligence specialist Allan Stevenson, explaining the U.S. military’s position on Vietnam.The most well-documented case of U.S. attacks on Vietnamese medical infrastructure occurred in December 1972, when American planes dropped over 100 bombs on the giant Bach Mai Hospital in Hanoi, killing at least 28 staff and an unconfirmed number of patients. During a Congressional hearing on clandestine activities in Laos and Cambodia, lawmakers were told that bombing of hospitals in those countries was “routine.”

To this day, Laos remains the most bombed country in history. North Korea, however, suffered the brunt of American attacks. In the course of the Korean War, the U.S. military destroyed an estimated 1,000 hospitals through bombing, as entire cities were leveled. Professor Bruce Cummings, America’s foremost expert on Korea, estimates that the U.S. killed around 25% of the entire North Korean population between 1950 and 1953.Israeli Crimes and American DreamsIsrael, of course, is no stranger to bombing hospitals, either. Virtually every health center in Gaza has been damaged or destroyed. Israeli Defense Forces snipers have targeted healthcare workers inside hospitals, and have kidnapped, and tortured doctors. A particularly noteworthy example is that of Adnan Al-Bursh, head of orthopedics at al-Shifa Hospital. In December 2023, al-Bursh was arrested and detained for months, and was likely raped to death by IDF troops.

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With Hungary’s Orbán Gone, Europe May Escalate in Ukraine, Triggering a War Without U.S. Backing

Viktor Orbán’s concession on Sunday following Hungary’s parliamentary election removes the most consistent single-state obstacle to EU consensus on Ukraine, and in doing so raises the probability of European escalation in a conflict the continent lacks the military capacity to sustain without American backing.

Orbán conceded defeat after early results showed the opposition Tisza party on course for a two-thirds majority, with Tisza projected to win 135 of 199 seats and Fidesz taking 57. Voter turnout surpassed 77%, the highest since the fall of communism in 1989. Tisza’s leader, Péter Magyar, a former Fidesz insider who founded the party two years ago, will become prime minister.

joint EU summit communiqués on Ukraine carried an asterisk noting the position “was firmly supported by 26 heads of state or government” rather than all 27, because Orbán refused to sign any statement backing Kyiv. He vetoed a €90 billion EU loan to Ukraine, tying the bloc to a dispute over a damaged pipeline carrying Russian oil. He also blocked a 6.6 billion euro lethal aid package from the EU’s European Peace Facility, satellite image sharing with Ukraine, and EU accession talks for Kyiv.

Magyar stated Monday that Hungary would maintain its opt-out from participating in the €90 billion (approximately $100 billion) loan financially but would not veto it, allowing the EU to proceed. His personal reservations about weapons transfers and Ukraine’s EU accession bid are structurally irrelevant. Measures requiring unanimity were blocked by Orbán. Magyar will not block them. The brake is gone.

The significance of Orbán’s removal is that, without a veto blocking consensus, the EU is more likely to agree on additional weapons, money, and equipment transfers to Ukraine. That trajectory increases the probability of a Russian reaction. The question is whether European leaders have accurately calculated the risk.

European behavior suggests they have not. Countries that genuinely believe they must confront a nuclear-armed adversary, the world’s number-two military power, alone would be pushing for negotiations, not escalation.

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