openpolitics.com

Why the U.S. Should Remain Protector of World Oil Flows

President Trump has suggested handing protection of tankers in the Strait of Hormuz to other countries, though that would carry its own costs

As tensions with Iran began escalating last month, President Trump made a startling statement: The U.S. shouldn’t be bearing the burden of protecting the flow of oil tankers past Iranian waters and through the Strait of Hormuz, one of the principal assignments the U.S. has accepted for the last four decades.

Instead, he said, China and Japan depend far more on Persian Gulf oil than does the U.S. these days, so they should protect their own ships. “We don’t even need to be there in that the U.S. has just become (by far) the largest producer of Energy anywhere in the world!” the president tweeted.

As tensions mount further, thanks to Iran’s announcement over the weekend that it is breaking the level of uranium enrichmentagreed to in the 2015 deal restraining its nuclear program, Mr. Trump’s pronouncement is more relevant than ever. Iran has made clear in recent weeks that it has two weapons with which to fight back against crippling American economic sanctions: One is to scare the world by reviving its nuclear program. The other is to shake the world economy by blocking the flow of oil tankers carrying oil out through the Strait of Hormuz, a threat illustrated with attacks on a handful of tankers.

In response, Mr. Trump was asking, essentially: Why should we care, if we don’t need your region’s oil as much as we used to? It is a question that seems at once both reckless and perfectly reasonable—one a lot of Americans probably are asking themselves.

Yet the question also serves as notice that political leaders regularly need to remind Americans, and perhaps themselves, why they benefit from assuming the kind of world leadership role that includes protecting the flow of oil out of the Persian Gulf.

The reasons the U.S. should still accept—indeed, should want—this role are both practical and geopolitical. The practical reasons start with the fact that the U.S. economy is still vulnerable to a disruption of oil supplies, from the Persian Gulf or anywhere else.

Oil is the ultimate fungible global product. If the price goes up for somebody because of a supply disruption, it goes up for everybody. The origin of the barrel of oil from which your gallon of gas is derived doesn’t really matter much in determining how much it costs. If there is a global shortfall, everybody pays the price, literally.

In that global marketplace, the Strait of Hormuz isn’t quite as important as it once was, but it is still very important. The U.S. Energy Information Administration reports that 21 million barrels of oil a day flowed through the Strait last year, or about 21% of the world’s total consumption.