During the 2024 campaign Donald Trump promised to cut energy prices in half. He has, instead, presided over soaring prices at the pump, which have played an important role in his collapse in the polls.
Some might attribute this disaster to Trump’s decision to go to war with Iran, ignoring what appear to have been near-unanimous warnings by experienced military and intelligence officials that such a war would, in addition to disrupting oil supplies, overstretch the U.S. military and dangerously deplete stocks of munitions — which is exactly what happened.
But Scott Bessent, Trump’s Treasury secretary, has found someone else to blame: Ukraine.
Yesterday Bessent went on “Fox & Friends,” where he pinned the blame for high energy prices largely on Kyiv:
We are going through an energy shock right now due to both the war in Ukraine, because Ukraine has decided that they want to blow up Russian energy assets and refined properties, so that is creating upward price pressure on a global basis, and the conflict in Iran.
Now, Bessent isn’t wrong to say that bottlenecks in refining capacity are playing a major role in the current energy shock. The chart at the top of this post shows changes in the price of crude oil and diesel, both measured in dollars per barrel, since the beginning of this year. Crude oil is up a lot, although off its peak in early April. But diesel is up much more (so is gasoline, although not quite as much.) And Ukrainian strikes on Russian oil facilities are certainly playing a role in reducing global refining capacity.
But note Bessent’s wording: Ukraine “has decided that they want to blow up Russian energy assets.” Gosh, why would the Ukrainians want to do such a thing? Might it have something to do with the fact that they are engaged in an existential struggle against Vladimir Putin’s regime, which is in its fifth year of a war aimed at destroying their nation, and they need to hit back at Putin’s military and economic base?
Notice, also, that Bessent didn’t point out that these attacks on Russian oil would end if Russia were to end its attempted war of conquest. But far from demanding an end to Russian aggression, the Trump administration infuriated the democratic nations of Europe by inviting Russia’s finance minister, for the first time since the Ukraine war began, to Monday’s meeting of the Group of 20 major economies.
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War over Middle Eastern oil makes the price of fertilizer, diesel, and every step of the transportation process that brings food to your table go up.
Simple math.
Oil prices are back up in the upper $90s a barrel
“Republicans have been facing a problem with voters over high gasoline prices for months — but the economic pain from near-record diesel fuel prices looks set to hit at the worst possible time for them,” wrote Politico. “The war in Iran, disruptions in Russian production and refining bottlenecks have sent the price of diesel fuel rising faster than that of gasoline or crude oil, and it’s now grinding toward an all-time record just two months ahead of the midterms. That matters for Republicans in particular because diesel prices hit first — and hardest — in rural areas and affect blue-collar businesses like farming and trucking before spreading to suburban dinner tables and the rest of the economy.”
As of Monday, the average price of diesel was $5.60 per gallon, an increase of about $1 from early July and almost $2 higher than a year ago. The all-time U.S. record $5.816 set in June 2022 is approaching fast, “and with U.S. inventories at their lowest-ever levels going into the peak diesel demand season, little relief is likely.”
Russia and Ukraine continue to attack one another’s port infrastructure, blocking shipments from the “breadbasket of Europe” and driving up wheat prices, and adding to a grim cocktail of factors afflicting global food supply.
The two vast nations are estimated to produce around a quarter of the world’s grain exports. The warring countries exported nearly 100 million metric tons of grain between them in the year to June, according to customs figures, with shipments largely continuing to flow since Russia’s full-scale invasion in 2022 thanks to diplomatic agreements to protect global food supplies.
Recent military strikes on grain export facilities, oil tankers and vessels in the Black Sea region have now made it too challenging for shipping firms to get insurance, meaning many are avoiding its ports. Alternative land routes for Ukrainian grain are also being stymied by low water levels on the Danube river, and by rail maintenance in Eastern Europe.
Agricultural shipments are being disrupted not just by conflict on the Black Sea but also by the blockade of the Strait of Hormuz and by the depletion of waterways such as Germany’s Rhine.
Ongoing obstruction of those waterways is helping drive up the price of agricultural products such as fertilizer — and adding to farming woes in the process.
Soaring costs for farmers around the world, from fertilizer and diesel to labor, will further jeopardize food security if many decide they simply cannot make the money they need, analysts warn.