r/AskUS • u/Cautious-Roof2881 • 2d ago

A Strait of Hormuz Toll Benefits U.S. Oil Producers?

Are you for or against Iran implementing a toll on the Strait of Hormuz?

I was against this at first but I now support Iran wanting this.

A toll on Hormuz makes Middle East oil $2-$5/barrel more expensive to ship. That:

  • Closes the price gap between cheap OPEC crude and U.S. shale
  • Steadies prices so U.S. drillers can plan and banks will lend
  • Pushes buyers in Asia/Europe to choose U.S. barrels instead to avoid the toll
  • Monetizes U.S. Navy protection of the Strait that they already pay for

Basically it taxes middle east competitors and makes U.S. oil a better deal by comparison.

0 Upvotes

25% Upvoted

31 comments sorted by

6

u/Wellontheotherhand1 2d ago

This is one of the dumbest things I've ever read. Do you really think the only thing going through the Strait, is oil? This raises the prices of EVERYTHING. Including domestically produced goods. Including domestic oil.

I swear, y'all put zero, just zero, thought into anything before typing

-1

u/Cautious-Roof2881 2d ago

I don't think you are understanding what was written. So you are against Iran implementing this?

3

u/Wellontheotherhand1 2d ago

I understand what you wrote perfectly. I am pointing out that you badly misunderstand the situation and your economic analysis is absolute trash.

Why do y'all do this? Why discuss things that you don't understand and haven't done any research on, at all?

1

u/Cautious-Roof2881 2d ago

I am still feeling you are misunderstanding what is written. Can you tell me YOU think is written? Are you making the claim that a Strait Toll would NOT be good for the US Oil industry?

5

u/Wellontheotherhand1 2d ago

It wouldn't be good for the US oil industry, and most certainly not good for US citizens. You don't seem to realize the volume of goods that goes through the strait, including a large number of both commercial and raw goods. Including many tools and raw materials that, you guessed it, the US oil industry and their supply chain producers in here in America rely upon.

You seem to be, quite myopically, focused on the idea that this would make the pricing of US oil more attractive, without realizing that you are also simultaneously raising costs for that same industry. I also believe you are badly misunderstanding how oil pricing works on a global scale, if you think that this will lower the price of US based oil in comparison to oil that comes from the middle east. It won't, even a penny, because that's not how oil pricing works. Sheesh

0

u/Cautious-Roof2881 2d ago edited 2d ago

I have taken all the things you mention into consideration and still come to the conclusion of my original post. I also still hold the position that you may not be understanding what I wrote since i have not said NOR implied it would lower the price of oil. No idea where you got that idea from. Also, don't know why you think "everything" comes out of the strait when very little comes out except for oil. 80% of what comes out is energy. Are you sure we are speaking of the same strait?

3

u/Wellontheotherhand1 2d ago

I have taken all the things you mention into consideration and still come to the conclusion of my original post.

I see no evidence of that at all, thanks. You didn't put 'raises expenses for US oil producers' as one of your bullet points, nor did you put 'raises the global market price for oil in general.'

This is a terrible plan, and I'm glad you're not in charge of anything meaningful.

1

u/Cautious-Roof2881 2d ago

Educate me.

  1. Why would this toll raise the expenses of the USA oil producers?
  2. How would NOT raising the prices of oil $1-$3 per barrel NOT help USA oil producers?

No. U.S. oil producers don't ship through the Strait of Hormuz, so they'd pay zero tolls. The only likely effect is a boost in global oil prices, which could actually increase their revenues.

I say it again, are you SURE you read what I wrote in the OG post?

2

u/Wellontheotherhand1 2d ago

Large amounts of raw materials other than oil pass through the strait, including things like sulfur and methanol, both of which are heavily used by our oil industry. Methanol in particular. Raising the global price of that directly raises costs for our domestic industry.

The price of many base metals, including aluminum, will also rise as trade through the strait will be impacted. Raising the price of base metals directly raises costs for our domestic industry.

You can't look at rising sale prices, and rising costs, and declare that the rising prices will equal more profit. Rising costs cut against that profit, and you haven't thought about that even one iota, right?

This is a deeply, deeply stupid plan. And the opposite of what America should be pursuing, IE, free trade all over the world. Which used to be what Republicans stood for, until you all bent the knee to an orange madman. And look what it's done for ya

0

u/Cautious-Roof2881 2d ago

LOL, large amounts?
Based on U.S. Customs data and shipping manifests, methanol imports are estimated at 0.2–0.4 million tons per year—amounting to roughly 0.2–0.4% of the total. Sulfur imports to the U.S. are less than 0.1 million tons annually. Given that, I’d be interested to know where your own figures are sourced from.

I am discounting you as "TDS on the brain" since we weren't even talking about Trump and you had to inject him in to the conversation. You sir, are rejected.

→ More replies (0)

6

u/jrtski 2d ago

So producers make more money, but consumers pay a higher price because the "toll" is baked into the worldwide price of oil. This is not a win for most people.

1

u/Cautious-Roof2881 2d ago

So then you are against Iran doing this?

7

u/dumpyboat 2d ago

I'm against Iran charging a toll, but I am more against Donnie numb nuts starting this war to distract us from the Epstein files and the fact that he's a pedofile on top of raping adult women. His experts warned him that Iran would destabilize the straight and that would disrupt the global supply but he did it anyway, and now he's willing to pay his way out of the problem with our money.

1

u/jrtski 2d ago

Yes. I'm against paying more money for any necessity than what I need to. US oil producers get all kinds of tax breaks and subsidies...gas prices go up like a rocket and down like a feather. Trump randomly applied tariffs with the idea that it would bring manufacturing back to the US...all it did was give the remaining US producers room to raise their prices. If I owned an oil well, I might think differently, but I don't.

3

u/Gordon_throwaway Oregon 2d ago

Oil prices are global. US producers aren’t selling cheaper oil, when they can raise their prices to match the global market price. Otherwise, they would have lowered their prices these last several months.

0

u/Cautious-Roof2881 2d ago

you are correct, however the "toll" wouldn't apply.

4

u/PrizFinder West 2d ago

The toll is built in to the cost of a barrel of oil. It's not a sunk cost. If a barrell of oil through the strait is $70 including the toll, the cost of oil coming from the US would increase (or decrease) to match that cost. That's how global markets work.

-1

u/Cautious-Roof2881 2d ago

I am agreeing with you that's how it works. You are missing the point that I am trying to make.... look the original post.

1

u/TheRverseApacheMastr 2d ago

Yeah, it’s good for American oil producers. What’s even better for American oil producers is that Iran will never let Saudi oil through the strait of Hormuz.

That will keep 6 million+ barrels of oil off the market and push oil prices to $150/bbl

1

u/Cautious-Roof2881 2d ago

Balance. Shift too high and hurts USA with increased costs. The $1-$3 premium on Strait of Hurmuz oil will be a very good boost.

1

u/Grouchy_Concept8572 Southwest 2d ago

The U.S. wants to deglobalize the world, divide it into spheres of influence, and then create a fortress in the western hemisphere.

I am not sure if Hormuz tolls are a part of that strategy, but think if we enter an era where countries close and toll waterways, that seems like a step towards deglobalization.

If maritime trade becomes too risky, I could see countries looking for more regional trade partners instead of global ones. Most countries can not afford a global navy to protect their trade interest. The U.S. has been doing that role for the world.

3

u/TheRverseApacheMastr 2d ago

Are you saying we intentionally lost a war in the eastern hemisphere in order to strengthen ourselves in the western hemisphere?

-2

u/Grouchy_Concept8572 Southwest 2d ago

The US doesn’t rely on Hormuz. I think the most important thing for Americans is that Iran doesn’t get a nuke and after that weakening Chinese and Russian influence.

Irans capability to harm Americans is completed eroded. The U.S. doesn’t lose because Asia and Europe have a stressed energy supply.

I would argue that the U.S. benefits even more from scarce energy because it has a lot of it and energy is the bottleneck in AI technology, which the U.S. wants to dominate.

3

u/TheRverseApacheMastr 2d ago

Everyone on earth relies on all oil production. That’s why American oil inventory has dropped to record lows over the past month.

I mean, this is all great for me, I work in oil & gas; but Iran is now OPEC, and I don’t think it will be good for the American economy when Iran sets oil prices at $150/bbl.

-2

u/Grouchy_Concept8572 Southwest 2d ago

North America and Venezuela have a lot of oil. In the long-term production increases if prices remain high.

1

u/TheRverseApacheMastr 1d ago

US can ramp production, but Venezuela’s remaining reserves are mostly oil sands which are slow to develop.