From Iran to gas prices
(Zoey Lawrence | CM Life)
In the current world of international war with Iran, there are various aspects that trickle down to the lives of college students.
The cost of energy and oil has hiked since the start of the airstrike, and around 20% of oil and liquefied natural gas is transported from the Straits of Hormuz.
“It’s very clear that this is going to affect the global economy, and you can see how it affects us,” said David Jesuit, Central Michigan University faculty member in the College of Politics, Society, Justice and Public Service. “I mean, fill up your car with gasoline.”
The current gas average in Michigan is $3.94 as of March 30, according to American Automoblie Association. The state average is one dollar higher than it was at this time last year
Jesuit said the war affects more than just filling up gas in your car. It affects all forms of transportation and the cost of groceries due to trucks delivering their stocks.
“We’ve already been struggling in this country with inflation, and this is contributing, this is inflationary,” he said.
Asia is experiencing similar gas prices due to the disruption of oil in the Straits of Hormuz.
The stock market is facing massive impacts across the map, as many economies rely on imported energy, according to U.S. Bank data.
Fidelity said the S&P 500 is a stock market index that tracks the stock performance of 500 of the largest publicly traded companies in the U.S.
It fell about 7% below its prior peak before stabilizing, while developed and emerging international stock indexes declined roughly 8% to 12%, U.S. Bank said in a post, with U.S. Bank Asset Management Group Research cited.
Jesuit said people aren’t willing to make investments, and it results in the stock market declining. He said it could turn to stagflation, which means the markets are in recession at the same time as it’s experiencing inflation.
Stagflation occurred in the 1970s, worldwide, according to Tufts Now.
Resources are also being diverted due to the conflicts in Ukraine, which began in 2014, but Russian military forces entered the country in 2022.
“You’ve seen sanctions on Russian oil that were just lifted that added some inflationary pressures on oil already,” Jesuit said. “So, the conflict there is also driving, I think, concerns or adding to concerns that people have about economic security moving forward.”
The Pentagon is currently considering diverting Ukraine military aid to the Middle East, the Washington Post reported.
The United States is sending about $127 billion in aid to support Ukraine, according to the Kiel Institute for the World Economy.
The biggest parallel between the current conflicts and World War I is the unanticipated conflicts, Jesuit said
“Nobody wanted to start the First World War, but the assassination of Archduke Ferdinand was seen as lighting the tinderbox, unanticipated calling,” Jesuit said. “Leading others to other alliances to get involved, and I mean, they stumbled into the First World War.”
At the end of WWI, gas prices were $0.25, but adjusted for inflation in January 2020 dollars, it equates to $4.27.
Jesuit said the cliche is that it’s much easier to win a war than win the peace.
“But I’m not sure the peace has ever been won, so it’s much easier to start the war than it is to stop the war,” he said.
The process of starting a war should involve careful decision-making that’s informed by rational calculations, he said, and added that it should include careful anticipation of what the other side will do if you start bombing.
“Most decision-makers like President Trump aren’t looking at a table of probabilities like I do as an academic,” Jesuit said.
Jesuit said he believes transitioning to cleaner energy should be a strategic priority, and moving away from fossil fuels would move the U.S. away from reliance on the global economy.
“We need to invest in these technologies not just for environmental reasons, but also because it reduces our reliance on energy from one region of the world,” Jesuit said. “What’s happening there is having such large consequences that ripple throughout the economy because of the oil.”
