It’s unclear how long the United States’ war against Iran will last. Some reports suggest President Donald Trump might declare victory and cease attacks within days; others foresee a long campaign with American boots on the ground. The lack of clear US objectives invites speculation. Even if hostilities end soon, the war highlights a perennial vulnerability of industrial societies: their systemic dependency on fossil fuels.

The 24-mile-wide Strait of Hormuz in the Persian Gulf, through which roughly 20% of world oil shipments pass, is an obvious pinch point for a vital industrial resource. But it also serves as an apt metaphor for the brittle global supply chains upon which the entire economy depends.

The US-Israel-Iran conflict has led to dramatic oil price volatility, with a swing of nearly 40% recorded on a single day. Most economics commentators understand that higher oil prices can be a drag on the economy, but prices are only part of the story. The war is likely to lead to long-term damage to oil production, storage, and shipment infrastructure in the Middle East. In the best-case scenario, if hostilities end immediately, the world’s crude deliveries could be stabilized in six months. But stability would likely resume at a lower level of output, since the ongoing oil production capacity of Iraq and other Middle Eastern producing countries is likely being compromised.

Iraq is the second-largest producer in the region after Saudi Arabia. If oil can’t be shipped or stored, production must be cut—not a light decision, as shutting in oil production can damage wells. But that is what’s happening: Oil production from Iraq’s main southern oilfields has dropped by 70% thanks to the effective closure of the Strait of Hormuz. Saudi Arabia, the UAE, Kuwait, and Qatar have also reduced production due to the war. Iran even hit oil facilities in their closest ally in the region, Oman.

This is a system destined to fail.

While spot prices for crude oil have spiked and fallen in recent days, futures prices are stubbornly high. Savvy oil investors and industry analysts don’t expect this oil crisis to be resolved quickly. A week and a half after the start of the war, US gasoline prices were up nearly 60 cents per gallon on average; historically, higher gasoline prices driven by oil shortages have persisted for weeks or months after oil prices normalized.

Then there are secondary impacts, largely overlooked by the economics commentariat. So far, the Iran war has effectively closed off one-third of the world’s helium supply. Helium is a depleting nonrenewable resource, like fossil fuels. Qatar’s Ras Laffan facilities, which produce 17 metric tons of helium daily, are now offline. Experts warn that if the Strait is closed to shipping for longer than two weeks, months-long global helium shortages could ensue. Helium is indispensable in advanced semiconductor production processes.

While semiconductors are staples of high tech, food is a more basic necessity for humans. Roughly one-third of the world’s fertilizer supply passes through the Strait of Hormuz, and fertilizer prices are spiking. Unless the war ends within days and shipments resume quickly, global food prices will inevitably rise throughout the year.

These developments underscore a message that we at Post Carbon Institute have been repeating for over two decades. Oil and other fossil fuels are the basis of the modern industrial economy. They’re polluting, but they’re also depleting. And in the case of oil (and, increasingly, natural gas) they’re internationally traded at massive scales, raising geopolitical risks. This is a system destined to fail.

But when? During and shortly after the US invasion of Iraq in 2003, the all-time peak in world conventional oil production seemed to be at hand. Indeed, in the last two decades, conventional global oil output has exceeded its 2005 rate in only a couple of years.

However, total oil production has continued rising largely........

© Common Dreams