OIL SHOCK HERE As Drivers CUT Gas Consumption

Everybody is downplaying this level of shock to the entire U.S. economy. Like, there is no way that it can survive in the way that it was before as a result of this war.

Yeah, well, I keep coming back to something that Rory Johnston has told us, that he thinks that traders are underestimating the impact because the reality is just too awful to actually price in. And so this Bloomberg piece sort of speaks to that dynamic. We can put this up on the screen. They say the billion barrel Hormuz oil shock is about to crash demand.

The Strait of Hormuz oil shock has yet to crash demand as the rich world borrows from its stocks and pays up to secure supply. Traders are now sounding the alarm that a harsh adjustment is coming. The longer the vital oil channel does not reopen, traders say the more consumption is

going to have to recalibrate lower to align with supply that's dropped at least 10%. For that to happen, people will have to buy less either through prices they can't afford or government intervention to force consumption down. A billion barrels of supply loss is already all but guaranteed more than double the emergency inventories that governments released not long after the conflict began at the end of February.

Buffers are being used up fast, helping to keep a lid on oil prices for now. But with the closure now in its ninth week, demand destruction that started in less obvious sectors like petrochemicals in Asia is quietly spreading to everyday markets the world over. And so, and they go on to say we are at a critical inflection point, and obviously here, no end in sight.

You know, not only do we have the Iranians controlling what goes through, you have the U.S. implementing some level of blockade and going after Iranian ships around the world as well. That's part of the stated policy. And as you were saying before, Sagar, there is some indication that Iran is still able to move some of their oil product, but certainly it is much, much, much, much less than pre-war. So at some point, you know, they use these, like, economic terms of art,

like demand, destruction, etc. What does that mean? It means that people will not be able to afford gas. It means the poor world is screwed. It means we're going to have a hunger crisis. It means that, you know, your budget is going to be stretched to the breaking point and you are not going to be going the places that you had planned on being able to go. It means for working class people

that are gonna struggle to afford even just to get to work and have that work out. So that is what we are on the precipice of right now.

Yeah, look, it's already here. Can we put C3 up there on the screen? I'm amazed that this is not a bigger story. This is from the Financial Times. They went through the numbers. It says, US motorists skimp at the pump

as Iran war keeps petrol prices high. I love British phraseology. They say, between February and March, average petrol sales, that's gas for those of us here in the US, per station in the northeastern US fell 4.3% in March, compared with a 0.6% growth in the same period as last

year. This is from data which tracks consumer spending at more than 23,000 gas stations across the nation. How is this not a bigger story? In the Northeastern United States, gas demand has fallen by 4.3%. That is actually huge.

Again, as they point out, last year, .6% of an overall increase. I mean, as I understand it, when the weather gets better, people tend to drive more and they take more trips. This is something which is very expected. That's part of the reason why whenever the weather starts to get February to March, you're gonna start to see a spike.

You've got almost a 5% drop in gas demand in the very same period as when you had an increase over, or at least stasis, in the same period of last year. 5% gas is huge. I mean, it's not like you can, 5% for a commodity which the vast majority of people are going to basically drive no matter what. It takes a lot for people to consume less gas.

And to say 5%, as if it's like some willy-nilly thing, is just not accurate, I think, whatsoever. Think about what a 5% drop in consumer spending in the United States would mean. It would be catastrophic, actually, for a lot of the US retail industry.

What would 5% mean when it comes to GDP or any of these things? It is not a small number, and it is a number from just one month that we saw an overall reduction in the amount of gas consumption. So that's here. I mean, look, I can only speculate,

but there's just no way if gas in Los Angeles is going for $6.79 a gallon or $7 a gallon, something like that, that people are gonna be driving as much. It's just not possible, like literally financially, without, I don't know, crazy credit card debt, people are going to make maybe the conscious

or the unconscious choice of saying, we're not gonna do X, Y, and Z. And remember, gas is just about on your way to go there. It's also about all the things you might've spent and the dollars that you may have had once you had arrived at that different destination.

So this is a serious quality of life hit, period. period, and I think it will also show up very soon in the data. Let's put C4 on the screen. This was another report which I was reading just yesterday. So Goldman Sachs put out a new report, basically for their own, like it's a research-style report. And they forecast that the US could lose 10,000 jobs a month this year as the oil shock ripples through the economy. This was in a client note.

A team of economists at the bank said they anticipate high unemployment and slow job growth to ripple through the end of the year as the impact of high oil prices ripples across the economy. In the bank's base scenario, the oil price would shave off 10,000 jobs a month through the end of the year, even after accounting for expected job gains in the energy sector. The bank also said it expects unemployment to tick higher to 4.6 by the end of the third quarter and the economy will lose 92,000 jobs just as part of the latest NARNFARM payrolls

report. The upward pressure on unemployment primarily reflects lower hiring with a smaller contribution from higher layoffs in industries most exposed to weaker consumer spending. And I think that will be, I mean, remember, Crystal, during COVID, very similar.

Hospitality at one point, what was their unemployment rate? It was like 80%. And so if you see similar reduction in gas demand, you will very likely see something happen like that, where people travel less and you start to see book something happen like that, where people travel less and you start to see bookings and the like thing

go down in the coming months ahead, not to mention jet fuel and the airline price increase as well.

Yeah, now there is one for the empire's perspective, there is an offsetting sort of dynamic here, which is that while you're getting screwed at the pump, you know, the oil producers are making money hand over fist. And since you have, you know, the Middle Eastern sources of oil greatly reduced,

people are coming to, you know, to buy American oil in droves. Like the, you know, amount of exports of American oil are skyrocketing. So, now that doesn't help you. But in terms of those oil executives and shareholders,

and in a certain sense, in terms of the interests of the empire, where then we have control over a larger share of the pie, the overall pie has been reduced, but what remains, we have larger control over that share of the pie.

There is somewhat of an empire benefit here. The problem is, though, that, you know, if you go beyond that energy control, I mean, there's a bunch of problems. Number one, what the bet, if you're thinking in that direction, the bet is basically that the rest of the world will suffer more than us. That doesn't mean we don't suffer, right?

That means we still suffer a lot, just less than the rest of the world. So maybe that helps us hold on to our hegemony. But I think that is a really flawed way of thinking about things when you consider how vulnerable we are because of how little we make here, how few of, like, critical supply lines we've been able to take control over. Energy is just one resource of many that are required even just to, you know,

re-equip ourselves from a defensive or war footing perspective. But when Trump talks about like, oh, we've got all the time in the world and everyone's going to come buy our oil, et cetera, I think that is part of what he's thinking about,

even as the cost to you at, not just at the gas pump, but with food inflation, with joblessness, with a stagnant economy, even though the costs there are very, very high.

This is why, look, the numbers you pay attention to are the ones which decide how you think the economy is doing. So the S&P is actually nearly an all-time high. It's only down 0.07% today. And Brent crude is, what, $107?

That's still very high compared to where things are. So you might ask, why are these things not showing up? Well, one of the reasons why the S&P is on a tear is because of AI. It has nothing to do with consumer spending. It has absolutely, I mean, it has some to do,

but very recently, the vast majority of the gains gains are concentrated in AI and in tech. Now, maybe that bubble will burst, who knows. But at the very least right now, you have all these crazy IPOs, OpenAI and Anthropic are anticipated to go for boom. I was just reading yesterday like signs of froth are everywhere in the market. But the point is, is that that's not

necessarily as connected to how you or I are experiencing these different things. Electricity bills are going up across the country with record power demand because of data centers, but not necessarily because of anything, you know, all that productive. We just talked about oil.

So while you may suffer at the pump, if you own a Houston Rolex dealership or a Dallas car dealership, you're doing great, right? I mean, you're booming. So there are certain pockets of the economy and of the top line numbers which will do very well.

It's really about how that's all going to impact the average person and their general consumer experience, I think, in the country. And that's very, very obvious. And yet, look, we already know that it's not like people listen as a result of those things. But the powerful force of the 2024 election, which turned so much on inflation and the comparison between the Biden years

and the initial Trump years. I mean, you cannot underestimate that as a political force going forward. Let's put C5 up there on the screen also just to show you, where's the priorities? The Secretary of the Treasury is out here defending, quote, US dollar swap lines as

Iran war harms global finances. Basically, this is a fancy way of saying that the US will participate in a bailout of the Persian Gulf during the Iran war. He said, current countries about US dollar swap lines are part of an ongoing routine conversation that Treasury has been having with our partners over a number of years,

and previously said many allies in the Gulf seek the same backstop as it wreaks havoc on oil rich nations economies. It's again, a very, very fancy, fancy way of saying that we're gonna bail out the UAE as a result of the war. And look, I mean, I'm not a fan of the UAE.

I just talked about it and all that. I do kind of get it. Like, they're like, you ruined our economy. You have to help us. Same with many of these other Gulf countries. But just think about the headlines.

They're bailing out Spirit. There's currently a $2.5 billion bailout offer from some of the budget airlines for the government to take equity stakes in their companies, again, because they're getting slammed by jet fuel. Now we're gonna bail out the UAE, we bailed out Argentina. Who else, can we bail out anybody here? Right, and you know, if you look at that

from a politics headline perspective, that really is gonna make people mad. I remember when we bailed out Argentina, when those farmers were getting hit, and we literally played a farmer, Trump, pro-Trump farmer here. He's like, I can't believe they're bailing out Argentina

while I'm here getting screwed by the same administration's policies.

Well, Trump told you, he gave you that answer. He said, we can't do Medicare, we can't do Medicaid, we can't do healthcare for people, we can't do daycare because we gotta do war. I mean, those are almost exactly his words. He put it quite plainly. Well, no, we're not going to do any bailout for ordinary Americans. No, that's not on the table.

We got to wage these wars around the world. Why? To make things worse for everybody, to make your life even harder, to make a bunch of military industrial complex war profiteers a lot wealthier.

That's apparently the reason here, to create distressed assets for his billionaire buddies to buy up. And there's very interesting tweet from if you aren't following Mr. Ghalibaf, the Iranian parliamentary speaker on Twitter, I highly recommend that you follow him.

He likes to jump in with some interesting financial analysis because that is part of his background. And so in reaction to this story of a likely currency swap line for the UAE in this bailout, he says this. Let's put this up on the screen. He says, Swaps given to prevent disorderly sale of U.S. assets, meaning treasuries.

Translation, some holders can't sell. In case you don't know, hidden single-digit percent sale cap limits some institutional holders. Door closes if things escalate. Get out while open. Their front line is the yield curve." Okay, so what does all of that mean? Basically, what he's pointing to is the fact that this administration, and sort of has to, watch the bond market very closely. Because if you're having to offer a higher interest rate to lure people in to buy treasuries, what does that mean?

It means our borrowing costs escalate. It's a financial catastrophe for us. So we've seen previously, especially with regard to the tariffs, that Trump is very sensitive to movements in that yield curve. That's why he says their front line is the yield curve.

OK, how does that connect to UAE? Well, there's a couple of sort of both overt and more subtle threats that the UAE made. One of them is they would need to sell some of their Treasury holdings if they are running low on dollars. So that would be, you know, that would be a problem for the Treasury market, and other countries may have to do that

besides. And then the other threat that they made is, hey, we're not going to have the dollars to be able to pay for oil in dollars. We're going to have to denominate our oil transactions in Chinese yuan. So that's why Scott Besant and Trump and everyone's like,

oh, no, no, no, don't do that. Don't worry, we got you. We'll do this currency line. So that is what's going on here, but Ghalibaf demonstrating a very sophisticated understanding of some of the pressures that the US is under and I guess some of the cards

that the Iranians continue to hold.

Whether it's his account or not, nobody knows really who's running it. They're very savvy because it's not just about diplomatic messages that are being posted. Much of it is aimed directly. In some cases, what was it, like the ticker on the Bloomberg? I'm not financially savvy enough to know this.

It was the command that you enter into the Bloomberg terminal for oil, for like oil crude prices.

If you don't know what we're talking about, sophisticated traders use something called a Bloomberg Terminal. What's a subscription for a Bloomberg Terminal? It's like $20,000 a year or something to get one. And like just to be able to trade on.

Just to give you an idea.

AI is definitely gonna destroy that business.

But that's not gonna be on there. If you've ever, I think my college library had a Bloomberg Terminal or two. So if you're in college and you're a student and you want to know what Goluboff is talking about, go and start plugging those things. I've never actually used one, but I have a few friends who have. But again, that's the audience who he's speaking to. He's trying to speak to the people who move the markets and trying to, I guess, talk some

sense from his perspective into some of these oil traders. In a sense, though, I don't even know what else, everything in our media seems totally disconnected. I just see it. Every day gas is above $4 a gallon. I'm like, this is a crisis. Brent crude is $107. I'm looking at it right now.

It is up 78% year to date. What are we doing here? Like 80% increase in the oil price? That there's, I mean, there's just no world. If I look at West Texas, I mean, I'm talking, it's 95, you know, 19, same thing. It's up like 70 something percent from where we were as of four or five months ago. Like that is, there's no describing. If I told you that before, even the Iran war or on January 1st of 2026,

as in oil is gonna go up by 80%. How would anybody react to that? But people are covering it as if, you know, oh, the ceasefire, yeah, look, we're gonna talk about the shooting, I agree it was a big deal.

Most of the reason that all the press, though, is obsessed with it is because they're all there. That's why they think it's like the big, they're all like processing their PTSD or whatever. I'm like, yo, the gas is four bucks a gallon. Gas in California is $6 a gallon. Every single day that this continues, it's a nightmare. And I don't know, I don't see the pressure from others,

you know, outside of a few Barak Ravid or other types of tweets to recognize, I think, the level of havoc that this is already having and will continue to have in our economy. It's genuinely driving me nuts. Hey, if you liked that video, hit the like button or leave a comment below.

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