The strait of Hormuz is now at the centre of the world. While the US-Israeli war against the Islamic Republic leads to death, destruction and pollution across the Middle East, the whole of the global economy is bracing for the fallout from the conflict. Shipping through the narrow passage has come to a near halt. Already, crude oil prices have shot to above $100 per barrel, up from $60 a barrel at the beginning of the year, while gasoline prices are jumping and airlines are announcing price hikes. Governments of oil-importing countries are scrambling to contain the fallout, announcing measures ranging from shorter work weeks to conserve fuel to price regulations. What they are not yet discussing – and what they should – is who, exactly, is about to get very rich from this.
The 2022 oil and gas crisis offers a template. It was the last time we saw a price explosion of this magnitude, triggered by Russia’s invasion of Ukraine. In our recently published paper in Energy Research & Social Science we map, in unprecedented detail, where those profits went. We also suggest there are ways to prevent profiteering, and redistribute the gains and losses from these shocks more fairly.
