America's strategic oil reserves are half of what they were. Trump was convinced by Netanyahoo that Iran would capitulate. Both men need the war as a distraction, but they miscalculated and have no exit strategy. The administration's artless approach makes it easy to see the lies, but it is also turning geopolitics into a powder keg.
Lets take a look at what "idiot Uncle Joe" did. In 2020, Americans turned out to vote for him in unprecedented numbers. During his four years in office, he delivered on his promises of environmental action and social justice with a raft of legislation and executive orders.
Biden rolled back a long list of Trump’s EOs and reinstated states’ right to enact stricter air pollution rules. He rejoined the Paris Agreement and pledged to slash emissions by more than half by 2030. They also called on world leaders to double their emissions reduction efforts. He strengthened the Environmental Protection Agency’s scientific standards and put safeguards in place to ensure that he will be free from political interference. He provided tangible support for low-carbon technologies, efficiency, waste reduction, clean energy, and transportation. He also supported technological innovation with the largest increase in non-defense research and development funding in American history.
His crowning achievement was the passage of the historic Inflation Reduction Act, the largest single investment in the environment by any nation in human history. He also addressed wealth inequality and racial justice with the Build Back Better Plan and the American Jobs Infrastructure Investment Act.
Biden fought in defense of democracy, and he called out the threat of domestic terrorism from white supremacists. On the world stage, he embraced the kind of multilateralism that is required to deal with the interconnected global threats we are facing.
PK's transcripts are ordinarily wonderful, but this looks like Substack's default transcription - which is really unsatisfactory. No para breaks, no indication of speaker name.
I remember waiting in long long lines during the Arab embargo in 73. Every time the line moved a bit, everyone got out and pushed their car forward one space. (No way you were going to sit for an hour with you motor running.)
The solution is a 5 year do-able project policy already adopted by France & South Korea:
Mandate solar canopy micro grids, including on-site non-flammable battery storage +Vehicle-2-Grid chargers, at ALL existing large parking lots, nationwide, within 5 years. Parking lot owners must provide this with the help of subsidies, or negotiate airspace leases to community micro grid developers. Energy savings pays for these projects in less than 5 years. If we don't get busy developing our residential & small business community energy tier, we're going to just continue being exploited by our existing industrial scale energy monopolist tier. This is an affordable energy policy for rational people who are looking for tangible results, rapidly delivered in their own neighborhood.
Glad that Prof Krugman mentioned the fact that Americans drive huge gas-guzzling cars. I have thought a lot about the different reactions to the 70's oil crisis and the 2008 market crisis (+gas price spike.)
In the 70's, people bought fuel-efficient cars, i.e. little Asian makes, and tried to reduce driving.
In '08, what did everyone do? Ran out and bought the biggest trucks and SUV's they could find. Somewhere along the line, our lizard-brain reaction to fear overtook our common sense.
Oil still lubricates the World economy and ~20% of that oil flows by tanker through the Strait of Hormuz. A complete blockage will remove approximately 20 million barrels per day (b/d) of oil and petroleum products from the global market. Even if every bypass pipeline in the region operated at 100% capacity, the world would still face a definitive shortfall of up to 15 million b/d that simply has no other way out. The world will have to compensate through a brutal combination of emergency measures, economic contraction, and a massive shift in energy flow.
Recall that the Iraq-Iran war lasted for 8 years and Iran absorbed perhaps 1 million casualties in a population that was 40 million at the start of the war and 54 million at the end. Today Iran’s population is 93 Million. The US-Israel war on Iran is not likely to be short.
The United States has reached a state of "energy independence" on a net basis, but it remains deeply integrated into the global oil market. As of March 2026, the U.S. is the world's largest oil producer, but it still imports specific types of crude to keep its specialized refineries running. The US produces 13.7 million barrels per day (b/d) of crude oil. The U.S. still imports about 6.2 to 6.5 million b/d of heavy crude. This is because many U.S. refineries (especially on the Gulf Coast) were built to process "heavy" or "sour" oil, while U.S. shale produces "light" or "sweet" oil. The US Oil export is essentially a "swap": we export the light shale oil that we have in excess and import the heavy Canadian or Middle Eastern oil that our refineries actually need to make diesel and jet fuel efficiently.
The bottom line is that we are likely only at the start of a major economic disruption similar to that in 1973-1974 and then 1979 – 1980. At that time oil went from $13 to over $34 per barrel. The economic impact led to "stagflation" (high inflation + high unemployment). Inflation went to ~15% and Interest Rates went to ~20% before the crisis subsided.
Although the current administration is attempting to slow the adoption of renewable energy and electrical vehicles, the developing oil flow disruption will show the benefits of this diversification of energy supply.
Ironically Texas accounts for ~43% of U.S. Total Oil Extraction and ~34% of oil refining and is the largest producer of Natural gas; while on the other hand Texas is one of the largest US producers of Electricity by Wind and Solar and also has Nuclear and some Hydro…..
As I understand it, thoughts that we are “energy independent” and should not be affected by restrictions at the Strait of Hormuz are misleading. Much of US produced oil is *light* crude from fracking. The US can’t make gasoline and similar products from light crude efficiently because most of our refineries only refine *heavy* crude; they can’t easily switch to refine light crude. We, of course, export the light crude to foreign light crude refineries for income, but you can’t put dollar bills in your tank.
Great conversation. Yes, people were more conscious of saving energy in the 1970s. What happened? Well, Reagan for one thing. But also let's not forget how our population has grown, and how our need for energy has mushroomed. So much so that even "clean" energy—while reducing CO2 emissions—contaminates water supplies and destroys plant and animal habitats. So here we are—too many of us using too much energy, and not doing a thing to reduce our consumption. As Reagan said: "We're Americans". Indeed!
Two of my fav teachers together, fantastic!
Came here to say exactly this!
#
#LovePeaceandunderstanding
HCR and Krugman. Sanity.
America's strategic oil reserves are half of what they were. Trump was convinced by Netanyahoo that Iran would capitulate. Both men need the war as a distraction, but they miscalculated and have no exit strategy. The administration's artless approach makes it easy to see the lies, but it is also turning geopolitics into a powder keg.
Lets take a look at what "idiot Uncle Joe" did. In 2020, Americans turned out to vote for him in unprecedented numbers. During his four years in office, he delivered on his promises of environmental action and social justice with a raft of legislation and executive orders.
Biden rolled back a long list of Trump’s EOs and reinstated states’ right to enact stricter air pollution rules. He rejoined the Paris Agreement and pledged to slash emissions by more than half by 2030. They also called on world leaders to double their emissions reduction efforts. He strengthened the Environmental Protection Agency’s scientific standards and put safeguards in place to ensure that he will be free from political interference. He provided tangible support for low-carbon technologies, efficiency, waste reduction, clean energy, and transportation. He also supported technological innovation with the largest increase in non-defense research and development funding in American history.
His crowning achievement was the passage of the historic Inflation Reduction Act, the largest single investment in the environment by any nation in human history. He also addressed wealth inequality and racial justice with the Build Back Better Plan and the American Jobs Infrastructure Investment Act.
Biden fought in defense of democracy, and he called out the threat of domestic terrorism from white supremacists. On the world stage, he embraced the kind of multilateralism that is required to deal with the interconnected global threats we are facing.
Have you noticed that you have two upvotes? You are not welcome here Putinist. GTFO.
I thought this was due to Obama wearing a tan suit in the Oval Office.
What a great combination of smarts and talent!
I want to be able to READ the text of the recording.
Click on „Transcript”.
PK's transcripts are ordinarily wonderful, but this looks like Substack's default transcription - which is really unsatisfactory. No para breaks, no indication of speaker name.
The conversation was very insightful
This was very helpful! I look forward to attending every Lunch Money videol
I remember waiting in long long lines during the Arab embargo in 73. Every time the line moved a bit, everyone got out and pushed their car forward one space. (No way you were going to sit for an hour with you motor running.)
The solution is a 5 year do-able project policy already adopted by France & South Korea:
Mandate solar canopy micro grids, including on-site non-flammable battery storage +Vehicle-2-Grid chargers, at ALL existing large parking lots, nationwide, within 5 years. Parking lot owners must provide this with the help of subsidies, or negotiate airspace leases to community micro grid developers. Energy savings pays for these projects in less than 5 years. If we don't get busy developing our residential & small business community energy tier, we're going to just continue being exploited by our existing industrial scale energy monopolist tier. This is an affordable energy policy for rational people who are looking for tangible results, rapidly delivered in their own neighborhood.
We are not lacking in ideas and solutions. It is not clear how long this can go on this way. It is unsustainable.
Glad that Prof Krugman mentioned the fact that Americans drive huge gas-guzzling cars. I have thought a lot about the different reactions to the 70's oil crisis and the 2008 market crisis (+gas price spike.)
In the 70's, people bought fuel-efficient cars, i.e. little Asian makes, and tried to reduce driving.
In '08, what did everyone do? Ran out and bought the biggest trucks and SUV's they could find. Somewhere along the line, our lizard-brain reaction to fear overtook our common sense.
Oil still lubricates the World economy and ~20% of that oil flows by tanker through the Strait of Hormuz. A complete blockage will remove approximately 20 million barrels per day (b/d) of oil and petroleum products from the global market. Even if every bypass pipeline in the region operated at 100% capacity, the world would still face a definitive shortfall of up to 15 million b/d that simply has no other way out. The world will have to compensate through a brutal combination of emergency measures, economic contraction, and a massive shift in energy flow.
Recall that the Iraq-Iran war lasted for 8 years and Iran absorbed perhaps 1 million casualties in a population that was 40 million at the start of the war and 54 million at the end. Today Iran’s population is 93 Million. The US-Israel war on Iran is not likely to be short.
The United States has reached a state of "energy independence" on a net basis, but it remains deeply integrated into the global oil market. As of March 2026, the U.S. is the world's largest oil producer, but it still imports specific types of crude to keep its specialized refineries running. The US produces 13.7 million barrels per day (b/d) of crude oil. The U.S. still imports about 6.2 to 6.5 million b/d of heavy crude. This is because many U.S. refineries (especially on the Gulf Coast) were built to process "heavy" or "sour" oil, while U.S. shale produces "light" or "sweet" oil. The US Oil export is essentially a "swap": we export the light shale oil that we have in excess and import the heavy Canadian or Middle Eastern oil that our refineries actually need to make diesel and jet fuel efficiently.
The bottom line is that we are likely only at the start of a major economic disruption similar to that in 1973-1974 and then 1979 – 1980. At that time oil went from $13 to over $34 per barrel. The economic impact led to "stagflation" (high inflation + high unemployment). Inflation went to ~15% and Interest Rates went to ~20% before the crisis subsided.
Although the current administration is attempting to slow the adoption of renewable energy and electrical vehicles, the developing oil flow disruption will show the benefits of this diversification of energy supply.
Ironically Texas accounts for ~43% of U.S. Total Oil Extraction and ~34% of oil refining and is the largest producer of Natural gas; while on the other hand Texas is one of the largest US producers of Electricity by Wind and Solar and also has Nuclear and some Hydro…..
Soooo important to hear from those who actually know what they’re talking about!!! Thank you for your insights.
Hello from Beaverton OR. You are my heroes
This was an excellent discussion on how economic issues are not addressed in the political world nowadays. Thank you both.
As I understand it, thoughts that we are “energy independent” and should not be affected by restrictions at the Strait of Hormuz are misleading. Much of US produced oil is *light* crude from fracking. The US can’t make gasoline and similar products from light crude efficiently because most of our refineries only refine *heavy* crude; they can’t easily switch to refine light crude. We, of course, export the light crude to foreign light crude refineries for income, but you can’t put dollar bills in your tank.
Heavy crude is imported from Canada and Mexico. See comment from "RZB" above. The U.S. still imports about 6.2 to 6.5 million b/d of heavy crude.
Great conversation. Yes, people were more conscious of saving energy in the 1970s. What happened? Well, Reagan for one thing. But also let's not forget how our population has grown, and how our need for energy has mushroomed. So much so that even "clean" energy—while reducing CO2 emissions—contaminates water supplies and destroys plant and animal habitats. So here we are—too many of us using too much energy, and not doing a thing to reduce our consumption. As Reagan said: "We're Americans". Indeed!