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Deep Into 2027: Iran War Leak · The Overlap

0:00
Christopher Lloyd is sitting in a truck stop outside of Richmond,
0:03
Virginia doing math he already knows the answer to.
0:06
In twenty twenty four he bought a flatbed.
0:09
New, $187,000.
0:12
And that's not really a purchase.
0:14
That's a marriage. That's a note that you carry whether the freight moves or not.
0:19
Then in February twenty eighth,
0:21
twenty twenty six, nine hundred strikes in twelve hours,
0:25
Iran. And within weeks, the diesel that he buys is.
0:29
The single biggest line item in his entire business is up more than forty percent.
0:34
So here's what Christopher Lloyd does.
0:36
He stops washing his truck. A wash runs about one hundred thirty dollars,
0:41
just gone from his pocket. He starts calling brokers and pushing for extra money
0:46
on every load, which is a conversation nobody enjoys and most people lose.
0:51
And he starts turning down runs to New England because the fuel math
0:56
on that lane doesn't really close anymore either.
0:59
He's not going out of business,
1:00
but he's shrinking quietly, one decision at a time.
1:04
And nobody's coming to help him.
1:06
There's no program, there's no line in a supplemental appropriation with
1:10
his name on it and a farm bill.
1:12
Now I want you to keep him in the back of your mind there for a second,
1:15
because here's the part that should make your teeth hurt.
1:18
The reason his diesel is up forty percent is a choke point called
1:24
the Strait of Hormuz.
1:25
And the reason it's only up forty percent instead of a hundred and forty percent
1:30
is that oil is still getting out.
1:32
Six to ten million barrels a day,
1:34
every day, leaking through a corridor along the Omani coast that
1:39
the United States Navy is escorting.
1:42
Which sounds like good news. It's not good news.
1:45
Because that leak is exactly enough oil to keep the global market from panicking.
1:50
And a market that doesn't panic is.
1:53
Is a market that doesn't force anything to stop.
1:56
Not Washington, not Tehran, nobody's phone is ringing off the hook.
2:01
The pressure valve is open just wide enough that the pot never actually boils.
2:07
As of August 23rd, 2026, the analysts looking at this are using a phrase that should
2:13
stop you dead. They say the war could run,
2:17
quote, deep into 2027,
2:20
not could end.
2:22
Could run deep into twenty twenty seven.
2:26
So Christopher Lloyd isn't absorbing a shock.
2:29
A shock ends. A shock you survive by cutting the trock wash for four months
2:35
and then you're back. He's absorbing a condition,
2:37
a new baseline, years of it. And the thing you need to hear before anything else
2:43
in this episode, nobody decided to do that to him.
2:47
That's the horror of it. Nobody sat in a room and
2:50
And voted to grind down a flatbed truck operator in Virginia.
2:54
It's just what happens when the war becomes comfortable enough to keep.
3:19
Welcome to the Overlap. Our show deals with labor politics,
3:22
systems of power, all kinds of fun stuff.
3:25
I'm Will.
3:26
And I'm Joshua. And I'll and I want to start with the word that's doing
3:31
all the work in this story because once you hear it,
3:33
it's kind of impossible to unhear.
3:35
Managed.
3:37
Manage disruption specifically,
3:38
Exactly.
3:39
right?
3:39
Manage disruption. And that's the three dollar big brain term.
3:44
That's what the energy analysts are calling the Strait of Hormuz right now.
3:48
Not blockade, not crisis,
3:51
managed disruption. It's like a project timeline.
3:56
Like there's a Gantt chart somewhere with Iran war on row twelve and
4:02
a green status dot next to it.
4:04
It probably is, Joshua, and that's the part that gets me.
4:06
Somewhere there is a slide with that term as its title.
4:10
There's absolutely a PowerPoint slide.
4:12
It has a map on it and the map has an arrow.
4:15
So it's the week of August 24th,
4:16
2026. Welcome to the week. Happy birthday to my brother out there.
4:21
~ almost six months into this undeclared war.
4:24
And the reason we're doing this now this week is that the story just changed,
4:29
but the headlines didn't. Which is the most dangerous way a story like this
4:33
can change. Back in February and March,
4:35
this was the biggest thing in the world.
4:37
You had strikes, assassination,
4:39
Iran's supreme leader dead, mines in the strait,
4:42
tankers burning, wall-to-wall coverage.
4:44
Twenty four seven and now it's Super El Nino and it's the little oil ticker
4:50
in the corner of the business segment.
4:51
The war didn't end, it got absorbed.
4:55
It always gets absorbed. And so let's be precise about why,
4:59
because it's not that people got bored.
5:02
People got bored because the price stopped moving.
5:06
Gas is really high right now. $4 and up.
5:10
And it's been $4 and up for months.
5:13
Diesel is over five. That's real money and real pain.
5:18
But it's not nineteen seventy-three.
5:21
It's not lines around the block.
5:23
It's not
5:23
Even odd even license plate days.
5:26
It's not a shortage you can actually see with your eyes.
5:29
It's just expensive. And it's going to be forever.
5:34
Does that make us the frog in the proverbial pot?
5:37
Well, which by the way is scientifically false,
5:39
frogs actually jump out.
5:42
Every time. Wouldn't be a lot of frogs around if they didn't.
5:43
But
5:45
yes, it's a it's rhetorically perfect,
5:47
so let's go ahead and keep it.
5:49
So the point stands there's no moment,
5:51
there's no day where it gets bad enough that the system has to respond.
5:55
It's a a gentle slope, not really like a cliff.
5:59
And I I want to just name the thing underneath that because this is where this
6:02
is actually what makes me angry.
6:04
And I don't get angry like I used to,
6:06
it takes a little bit more now.
6:07
But the crazy thing is a ward that hurts everyone a little
6:11
bit forever is politically cheaper than a ward that hurts a few people massively
6:17
for a week. That's really the equation.
6:19
That's the actual equation. Diffuse pain spread thin across three hundred
6:23
and forty million people is survivable for the people making the decision.
6:28
Concentrated pain is not. It's like the same kind of ~ reasoning that went into
6:32
the the cars that used to explode when you hit them from when they
6:35
got rear ended and they their gasoline tanks would might explode.
6:37
~ the company has to decide, you know,
6:40
is it is it more painful to let a few people die or more painful to replace
6:44
all the cars and all the gas tanks?
6:45
But here the incentive is not conspiratorial.
6:49
~ I think it's just how the machine,
6:50
the modern day machine, functions.
6:52
The incentive runs toward diffusion,
6:54
toward the leak.
6:55
Towards six to ten million barrels a day,
6:57
squeaking through a mon so that nothing ever gets bad enough to force
7:00
a real reckoning.
7:01
And here's why we're going to spend the first part of our show
7:05
in nineteen eighty seven instead of last Tuesday.
7:08
Because this exact arrangement American warships escorting tankers through
7:14
a a ~ mined choke point in somebody else's optional
7:19
war indefinitely with no declared endpoint,
7:23
that's already happened. Reagan did it.
7:25
It had a name.
7:29
No relation.
7:30
No no relation. And the shape of it,
7:32
the logic of it, the way it substituted a naval workaround for a political solution,
7:38
it's kind of the same shape. Not similar,
7:40
like a facsimile.
7:43
And the other thing that already happened is the domestic half of this,
7:45
right? The truckers like you're talking about back in nineteen seventy three.
7:47
That's not a metaphor either. That's an organization that still exists
7:52
and a guy who's on the record right now drawing the line himself.
7:54
So that's the episode, nineteen eighty-seven,
7:56
nineteen seventy-three on one side,
7:59
and then Heg Seth's and ultimately Trump's two hundred billion dollar optional
8:05
war and ask that Chevron's biggest quarter in company history on the other.
8:12
And the Christopher Lloyd guy we talked about,
8:14
$130 truck wash, is just kind of sitting right in the middle of it,
8:19
where the average person actually already always sits.
8:23
Right. Where the little guy always sits.
8:25
So 1987, the Persian Gulf. Context first,
8:30
because it matters. Iran and Iraq have been at war since about nineteen eighty.
8:37
Saddam Hussein started it, and by the mid-80s,
8:41
that war has spilled into the water.
8:44
Both sides attacking tankers, trying to strangle each other's oil exports.
8:48
They
8:48
call it the Tanker War, right?
8:50
And it it's exactly as ugly as it sounds.
8:52
It's merchant ships, civilian crews,
8:54
and they're all just blowing up and exploding and burning.
8:57
Kuwait's shipping is getting hit because Kuwait is bankrolling Iraq.
9:02
So Kuwait goes to Washington with a very clever request.
9:07
They basically say, Look, why don't you put your flag on our tankers?
9:13
reflagging. I used to do that in Sid Meyer's Pirates.
9:16
Reflagging. You take a Kuwaiti tanker,
9:18
you run the good old red, white,
9:21
and blue American flag up the mast,
9:23
you paper over the ownership, and now legally it's a US flagged vessel,
9:29
and a US flagged vessel gets a US Navy escort.
9:33
That is the entirety of Operation Ernest Will.
9:36
And it is, look,
9:37
No relation.
9:39
it is genuinely clever. It's also
9:43
Completely legal fiction wearing a mask.
9:46
Nothing about that ship changed except the paperwork.
9:49
Same steel, same oil, same owners.
9:52
But the paperwork is what lets the United States Navy start escorting convoys
9:57
through a war zone without anyone having to say the word war.
10:01
Which is the tell. Every time you see an elaborate legal workaround,
10:05
ask yourself, what is it a substitute for?
10:07
It's really always a substitute for somebody a decision that somebody didn't want
10:11
to make out loud.
10:12
That's exactly right. And here's how well the workaround worked.
10:16
First convoy, july nineteen eighty seven,
10:19
the super tanker Bridgeton, Iranian jets come out and take a look at the ship.
10:26
Just approach, just a message,
10:28
and then the Bridgeton hits a mine.
10:30
In a channel the US Navy had escorted the boat into,
10:35
Iran had mined the route.
10:38
And the detail that lives in
10:42
In all our heads rent free, the Bridgeton was the biggest ship in that convoy.
10:47
And after it was holed, the Navy warships tucked in behind it,
10:52
because it was the only vessel in the group with enough hull
10:56
to survive another mine. The escorts hid behind the thing that they were actually
11:02
escorting.
11:03
Okay, that's almost too perfect to metaphor.
11:04
I mean that's a whole foreign policy in one image.
11:07
It is the whole foreign policy and in general our foreign policy about
11:11
the Middle East in one simple sweep of a pen.
11:15
The protection racket where the protector gets in the backseat.
11:19
There's a piece of this I want to add because it complicates the villain,
11:22
and I think that matters. On the Iranian side,
11:25
during that period, the Revolutionary Guard Naval Command had worked up a plan
11:29
for a small boat swarm attack on that convoy.
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~ you know, fast boats, close quarters,
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the thing they're actually good at.
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And it went up the chain to Khamani and Ruhalla Khomeini and he vetoed it.
11:41
He said no.
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He said no. And I don't tell that story to make him sympathetic.
11:46
He's not sympathetic.
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I tell it because it shows both sides were doing the same calculation.
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Iran wanted to bleed the convoys without triggering an actual American war.
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The US wanted to escort the convoys without declaring one.
11:57
Both parties were managing the disruption.
12:00
And you can trace where that logic goes.
12:01
And you can of course.
12:02
December
12:03
6, 1987, a Singapore Singapore flag tanker called the Norman Atlantic gets
12:08
set on fire by an Iranian warship in Omani waters,
12:12
right by the strait. Not a swarm,
12:14
not an escalation to war, just one ship,
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one fire.
12:17
Calibrated response.
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Calibrated, that's the word, and that's the word we'll come back to
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in about ten minutes, wearing a brand new twenty twenty six suit.
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Sure is. Looking sharp.
12:28
So now the domestic side of this,
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because Americans experience these things at a pump,
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right? Not in a strait, not on a boat,
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not with ~ a a warhead, not with mine.
12:40
So go back further, nineteen seventy-three,
12:43
the Arab oil embargo, fuel shortages,
12:47
price spikes, ~ the whole thing.
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And in nineteen seventy-three is the year the owner operator independent drivers
12:55
association gets founded.
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I don't even want to try to pronounce this.
12:59
It's the OOIDA. O Ida?
13:03
Sure. Formed that year speci
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Suddenly I'm hungry for potatoes.
13:08
Yeah, it sounds a lot like Orida.
13:10
But it formed that year specifically because of what fuel prices were doing
13:15
to independent truckers, just like guys with CDLs.
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And and that's kind of the structural trap of this,
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because it hasn't changed in 53 years.
13:25
Owner operators.
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They pay for the fuel. And the shipper pays a fixed rate
13:33
for that trucker to drive it. And then that rate was negotiated before
13:37
the fuel price actually moved.
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So then when diesel doubled, the shipper's cost doesn't change at all.
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The driver has to eat a hundred percent of it because it's contractualized.
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Every single penny of that deal.
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And so they have no option to but to shut it down.
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And they did. In nineteen seventy three into nineteen seventy four,
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the truckers blockaded highways and they parked their their rigs across interstates.
14:03
And they do it again in nineteen seventy nine.
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And what finally cracks isn't isn't the goodwill,
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right? It's the Interstate Commerce Commission,
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who is a federal regulator mandating fuel surcharges,
14:16
making the pass through a rule instead of a favor.
14:21
And this is where Todd Spencer comes in,
14:23
who runs O Ida today,
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right now in 2026.
14:27
Yeah.
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And what he's saying this year is that drivers on the road today do
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not have those protections. The formal mandated surcharge protections that came
14:36
out of 74 and 79, those are gone.
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Deregulation happened. The ICC itself doesn't exist anymore.
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So the surcharge is now just a negotiation.
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Every time with a broker who has 40 other trucks to call.
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Which
14:49
means Christopher Lloyd in Richmond in twenty twenty six is in
14:53
a weaker legal position on fuel costs than a trucker in nineteen eighty one.
14:59
exactly what that means. The lesson was learned,
15:02
written into a rule, and then the rule was repealed.
15:04
And now it's being relearned by individual guys one at a time out
15:08
of their own pockets.
15:09
Whew, if that is not an American pattern,
15:12
I don't I don't really know what is.
15:13
We we win something collectively and then it gets dismantled privately
15:20
and then we all act surprised.
15:22
And Spencer makes one more point that I think most people miss.
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He says the fuel cost doesn't stop at the truck and goes into the food.
15:29
Every tomato, every gallon of milk,
15:31
every case of anything moved by a truck or burning diesel that costs forty percent
15:35
more. That cost doesn't just disappear,
15:37
it doesn't evaporate. It gets handed up the chain until somebody
15:40
re it reaches somebody who can't stand it or can't hand it any further along.
15:43
Which is you, which is me, which is all of you listening
15:46
Right.
15:47
out there, at the register wondering why groceries went up again.
15:51
Groceries such a antique word.
15:55
And never once connecting it to a straight you can't find it on a map.
15:58
So let's let's close the loop from nineteen eighty-seven to now with
16:02
one more marker because there is a step in between,
16:05
and and it's kind of important to the overall story.
16:07
2011 and 2012, the United States escalates sanctions on Iran's energy sector,
16:13
like really hard. And Iran responds by threatening the Strait of Hormuz very openly.
16:20
So that was the cycle. We squeeze the oil revenue,
16:23
they threaten the choke point.
16:25
We deploy naval assets, everybody backs off,
16:28
nothing's resolved, and then you just repeat that in a decade.
16:31
The Congressional Research Service has documented that loop,
16:34
and it's in literature, it's ~ a known,
16:37
studied, named pattern.
16:40
So when it happens again in twenty twenty six,
16:42
nobody gets to claim to be surprised.
16:44
And nobody really is surprised,
16:46
except that this war was optional.
16:48
Like we didn't have to do this.
16:50
So I I do want to be careful here because we have seen this before can slide into
16:56
so it doesn't matter. And it matters more now because
17:00
the difference between nineteen eighty-seven and twenty twenty-six isn't the shape.
17:04
The shape is the same. We've already established that,
17:06
right? Choke point, escort, workaround,
17:09
no resolution. The difference
17:11
is the scale of the money moving through it and who actually ends up holding
17:16
the bag when it does. In nineteen eighty seven,
17:19
the bag was mostly held by a naval budget and some insurance underwriters in London.
17:25
And now?
17:26
Yeah,
17:26
now it's a two hundred billion dollars supplemental request,
17:31
a s a strategic reserve at its lowest point since nineteen eighty two,
17:36
and a major oil posting the largest quarterly profit in
17:41
its entire history while calling it discipline.
17:45
Let's go there.
17:47
February twenty-eighth, twenty twenty six,
17:48
you can start the clock. US and Israeli forces launched near nine hundred strikes
17:54
on Iran in twelve hours. That's nine hundred in half of a day.
17:59
And they kill Ali Khomeini, who was the supreme leader of Iran and and
18:04
a dozen of officials that were actually with him at the time.
18:07
They also killed about a hundred and seventy people when a missile
18:13
hit a girls' school near Bandar Abbas.
18:16
A hundred and seventy.
18:18
Now we know from you know the movie in the nineteen nineties,
18:23
which I just happened to see on a restaurant,
18:25
~ a few good men, that a hundred
18:29
and seventy people gets written up to you know just the price of war.
18:35
We're in war and then and people die and there's gonna be casualties on both sides,
18:40
kind of a thing. ~ but I don't want to just gloss over the
18:44
These individual people, because it was 170 completely innocent school children
18:50
at a school. So near Bandar Abbas,
18:53
which is the Iranian port city right along the Strait of Hormuz.
18:57
I think that saying that number out loud and remembering it,
19:01
because it's important. In six months,
19:05
coverage of this war there we're in,
19:08
this optional war.
19:10
That number has been said out loud a a couple of times.
19:13
And I think it should be said kind of every single time because these were just
19:17
little girls.
19:18
And even if we can't handle the truth,
19:20
it should be said every time. And I'll say the thing I always say and always mean,
19:24
I don't know how to hold that alongside a discussion of quarterly earnings.
19:28
I genuinely don't. But we have to because they're in the same causal chain.
19:32
I mean the school and the earnings are all on the same wire.
19:34
It's kind of gross actually how how often we have to talk about lives with dollars.
19:41
~ but the straight the the Iran basically installed mines
19:48
all along it, closes it, and the man running that operation is an IRGC naval officer
19:54
named Ali Reza Tangsiri. He oversaw the blockade and the mining
19:59
and then Israel assassinates him during the campaign.
20:03
Which does what exactly to the mines?
20:06
Nothing. Because see mines, once they're placed,
20:08
don't really have a chain of command.
20:10
That's the thing about the this whole like naval decapitation strategy.
20:15
You can kill the the leader of that naval blockade and the admiral,
20:20
but the bomb doesn't really give a shit.
20:24
Right.
20:25
And the US sets up its own blockade going the other way,
20:28
and Trump's claim is that the blockade costs Iran five hundred million dollars
20:33
a day. And the Defense Department's own estimate was more modest,
20:38
about four point eight billion in lost Iranian oil revenue as of may first.
20:45
Which doing the math on that is nowhere near five hundred million a day.
20:49
Not even close. five hundred million in a day for roughly sixty days from March
20:54
to may first would be about thirty billion dollars.
20:57
The Pentagon says four point eight.
21:00
So the president's number is off by a factor of six,
21:04
like multiplied. It's really, really weak when he says things like this out loud.
21:10
And I want to flag that not as kind of like a gotcha,
21:13
right? But as a data point about how this war is being described.
21:17
to the people that are actually paying for it.
21:19
Here's where I want to plant my flag,
21:21
and this is just my read, it's not a hedge.
21:23
The Oman corridor is not a failure of the blockade,
21:26
it's actually the design of it.
21:27
So six to ten million barrels a day are leaking out of Hormuz through
21:31
a corridor the US Navy protects.
21:32
That's not seepage, it's not a gap somebody hasn't gotten around to closing.
21:36
It's a deliberate volume. Somebody picked that number.
21:40
And the reason somebody picked that number is because it holds oil under
21:43
a specific price.
21:45
The analysts are explicit about this.
21:46
The current posture is sustainable through the midterms if crude stays under ninety
21:51
to a hundred dollars a barrel.
21:52
That's the threshold. That's the actual war aim as it functions today,
21:56
whatever it was in J in February.
21:58
Not regime change, not denuclearization,
22:02
a price ban.
22:03
And the policy objective is a number on the screen in Chicago.
22:06
And once you see that, everything else lines up.
22:09
Why there's no negotiation, why there's no off ramp?
22:12
Why nobody's in a hurry.
22:13
And Don Alamiryu at Alpine Macro is is the one saying the quiet part,
22:19
right? That the corridor eases market pressure and removes the urgency
22:25
to end the war. Those are two halves of the same sentence.
22:29
The thing that makes it bearable is the thing that makes it permanent.
22:34
Dave Wex ~ looking at the same flow and getting the same picture deep into twenty
22:41
twenty seven.
22:42
And there's an escalation hook in there too,
22:44
which is the midterms themselves.
22:46
Because the price band is stable right up until somebody dec decides
22:49
a war looks better on a ballot than a stalemate does.
22:52
Which is the least comfortable sentence either of us will actually say today.
22:56
Let's talk about the money. Three buckets.
22:59
Pentagon, reserve, profits.
23:03
Bucket one, Pete Hegseth,
23:06
the Secretary of War, which is what we apparently call it now.
23:11
They rename the department. That's incredibly real.
23:14
Asks for at least two hundred billion dollars.
23:19
In supplemental funding for this war.
23:21
That's not a war, that is a war until it's not,
23:25
unless it's a war. I I'm really lost on these things,
23:30
but on top of a $1.5 trillion budget request
23:36
for the fiscal year 2027. And when asked whether the number could go up,
23:41
his answer, and I quote, was it takes money to kill bad guys.
23:46
Take
23:48
That is the quote from the man requesting two hundred billion dollars for
23:53
a war that we can't call a war because Congress has never authorized a war.
23:58
And I want to sit on that idea of never authorized for one second because
24:01
I did the law school thing, and this is the part where the law school thing
24:04
is actually useful. ~ there is no authorization for use of military force against
24:08
Iran. None. Zero. Zilch,
24:11
nada. Not a new one, not a plausible stretch of an old one.
24:15
The strikes on February twenty eighth were a pure executive action.
24:19
The blockade is an executive action.
24:21
The escort corridor is an executive action.
24:23
And Congress has noticed twice.
24:26
The House passed war powers resolutions in June and July.
24:29
June was two hundred fifteen to two hundred eight.
24:31
July twenty third was two hundred fourteen to two hundred eight.
24:34
Both times with Republicans crossing the the the aisle.
24:39
Four of them in July, second time for several of them,
24:43
Thomas Massey among them because you know he doesn't have to run
24:47
an el another election.
24:49
Right, messy. here's the detail that tells you what's actually driving this
24:53
politically. The defectors cited gas prices and fertilizer prices.
24:57
Not the little girls' school in Iran where a hundred and seventy were dead.
25:01
Not the constitutional question,
25:03
but fuel and fertilizer.
25:06
Fertilizer for anybody wondering,
25:07
because nitrogen fertilizer is made from natural gas.
25:11
So an energy shock is a food production shock about nine months later.
25:16
It's like a it's like the baby fertili fertilizer shock is is
25:21
the oil shock baby nine months later.
25:23
Right. You know what the farmers were doing nine months ago.
25:27
Right. And and you can ask any farmer in Kentucky,
25:29
and they know that because they deal with that.
25:32
That is their specialty, that is their career.
25:35
Right. And these war resolutions,
25:36
these are a concurrent resolution,
25:37
which I have to be honest about this.
25:39
A concurrent resolution doesn't go to the president and doesn't have
25:41
the force of the law. It's Congress clearing its throat,
25:44
loudly, on the record, with names named,
25:48
but it has value. It doesn't turn off a single ship,
25:51
but it has some value.
25:52
Then bucket two, the Strategic Petroleum Reserve.
25:56
As of august nineteenth, the SPR,
25:59
as we're going to call it from now on,
26:01
is at its lowest level since nineteen eighty two.
26:04
Like nineteen eighty two. The lowest it's been in my entire lifetime
26:11
is right now. It's headed for something like two hundred forty three million barrels
26:16
after a hundred and seventy two million barrel release to blunt the fuel disruption.
26:22
And it was already spread pretty thin before the war started because
26:25
in two twenty twenty two and twenty twenty three,
26:28
the Biden administration sold close to two hundred million barrels of
26:33
it during the Ukraine price spike.
26:35
And it never got fully refilled.
26:38
There's a a government accountability office report from june twenty ninth
26:43
of this year on the state of the SPR,
26:45
including the physical condition of the caverns that we actually hold this oil in.
26:52
So bizarre. 'Cause when we think of Fort Knox holding a strategic reserve of gold,
26:56
we imagine we walk in there's just this room,
26:58
you know, big bank vault full of gold.
27:00
Apparently there are caverns just full of oil.
27:04
But they also need repair.
27:04
You know where a lot of those caverns are?
27:06
Yeah, do you know where a lot of those caverns are,
27:08
I I've been told? In
27:09
Tell
27:10
us.
27:11
the salt domes around Avery Island,
27:13
where a lot of those, like once the salt was mined out of there,
27:15
they were
27:17
I've heard that before.
27:19
Okay.
27:21
I ~ skeptical cat is skeptical.
27:24
I would have to do some more research on that.
27:25
But I have heard that specific thing.
27:27
Like ~ my father worked down there at one point on some pumps.
27:31
And ~ he was was he went down into the domes.
27:37
And I mean, we've seen people die from these dome collapses and things down when
27:41
we lived in Louisiana and and hear still about it on the news.
27:43
But he never mentioned anything like
27:46
giant rooms full of oil. But I I mean it could be in
27:48
Hmm. Fair enough.
27:50
different ones. But we do know that they need repair regardless.
27:53
Both of them.
27:54
Right. Which sounds like something in Louisiana.
27:56
So so we
27:57
Yeah, right.
27:58
went we went into an oil war here with the emergency oil supply half empty
28:02
and the tanks needing maintenance.
28:04
That's right. Not not just maintenance.
28:07
Then we drained another hundred and seventy two million barrels of it
28:11
out to hold this price band between ninety and a hundred dollars a barrel.
28:16
Something tells me that's not what they intended by these originally.
28:19
But it but it worked, right? I mean it it kept it down into the rate where it's
28:23
not reaching crisis thresholds.
28:25
But you only get that shot once.
28:27
That that shot's been fired now.
28:29
Yes. You only do get to do it once.
28:31
That's the whole nature of a reserve,
28:33
right? Like it's a one shot pony,
28:35
one trick pony. We're firing our one shot to maintain a stalemate that analysts
28:40
say runs deep into twenty twenty seven,
28:43
which means when something actually goes wrong,
28:46
a real closure, a hurricane hitting the Gulf refineries,
28:50
literally anything, there's no reserve in the cupboard to reach for.
28:56
There's no closure.
28:56
you know, dusty can of green beans or a weird,
28:59
you know, can of Campbell soup ~ back in the in the wings waiting for you
29:04
to put a little bit of water in it.
29:05
An energy secretary, Chris Wright,
29:08
is the man holding both ends of this.
29:10
The drawdown and the refill that has to happen at whatever price
29:15
the market gives him, which will not be a good price as we've established.
29:19
You sell low, you buy high structurally when you're the government in a crisis.
29:24
Look at bucket three where the money went.
29:26
Yes, Chevron, second quarter of twenty twenty six,
29:30
twelve point one billion dollars in profit.
29:34
Largest quarterly profit in the history of Chevron up nine point
29:40
six billion year over year. That's a nine point six billion dollar jump
29:47
in one quarter against the exact same quarter last year.
29:51
And her first while CEO Mike Worth attributes it to stay with me now,
29:56
kids, disciplined investment. That's right,
29:58
Disciplined investment. Not the war,
30:01
not the war.
30:01
not
30:03
the straight, not the missing barrels,
30:05
discipline.
30:07
And I want to take that seriously for one beat because I think it's dismissing
30:10
dismissing it entirely is a mistake.
30:11
Chevron did make capital decisions.
30:14
There is a real management story in there somewhere.
30:16
Fine. But a $9.6 billion year-over-year swing in 90 days
30:23
is not discipline. That is not a thing operational excellence achieves.
30:27
That's a price move. Everyone in the room knows it's a price move,
30:30
and the reason he says discipline.
30:32
Is not because he expects you to believe it,
30:34
it's because he needs a sentence in the transcript that isn't,
30:36
we made ten billion dollars because a choke point closed.
30:40
Because that sentence has a tax attached to it.
30:43
That's and it says have a tax attached to it,
30:45
and that's the whole reason for the euphemism.
30:46
It's legal positioning dressed as modesty.
30:49
Exxon and Chevron together twenty six point five billion in the second quarter
30:55
of this year in profits. And Wood Mackenzie Energy Research Shop,
31:00
not an activist group, like an actual energy research place,
31:04
projects a global oil and gas windfall for twenty twenty six of four hundred
31:10
and ninety five billion dollars.
31:13
four hundred and ninety five billion,
31:16
that is nearly half of a trillion unanticipated,
31:20
their word.
31:22
Hm. Well, and they know that next year they'll have some well hopefully
31:26
if we can get things back to normal to somewhat we well next year we'll have some
31:29
reserves to top off. ~ but to your point,
31:32
unanticipated is doing a lot of work there.
31:34
Nobody planned the war to make that money and nobody needed to.
31:37
Right. And this is where I wanna kinda head off the conspiracy version of all this,
31:44
because the conspiracy version is both wrong and less damning.
31:48
Nobody at Chevron drew up the target list.
31:51
That's not how this works. And you don't need it to be.
31:54
You just need a system where the same event that costs a Richmond trucker
31:58
his margin hands an oil major ten extra billion dollars automatically.
32:05
No decision required by anyone.
32:07
It's not a plot, it's a payout structure,
32:10
it's just plumbing.
32:12
And the response in Congress is windfall profits taxes.
32:15
White House and Kana have one.
32:17
~ Sheldon White House's office put out the summary in March,
32:21
and it explicitly builds the case on precedent on ExxonMobil's ~ seventy seven point
32:26
eight billion dollar profit in twenty twenty two during Ukraine,
32:30
which was two hundred and forty nine percent of what they made in twenty twenty one.
32:34
Brad Sherman has another bill and there are a couple floating out there.
32:37
And will those bills pass?
32:39
No.
32:40
No, they will not pass. And they won't pass for the same reason
32:44
the war powers resolutions are cons concurrent resolutions instead of binding law.
32:49
The votes exist to sort of let the objection be known.
32:55
They do not exist to change these outcomes.
32:58
That's a distinction worth learning to figure out because once
33:02
you can actually figure that part out,
33:04
you'll see it everywhere.
33:06
Well everyone take a bio break if you need it.
33:07
When we come back, the people actually paying for all of this.
33:10
I want to go back to the truck stop.
33:12
Christopher Lloyd, Richmond, Virginia,
33:15
owner operator, which means he owns the truck.
33:18
He finds the freight, he buys the fuel,
33:20
he does the maintenance, he does the books,
33:22
he does the compliance paperwork,
33:24
and he drives. All of it. He is a company of one with $187,000 capital asset
33:30
and no HR department. Probably for the best.
33:32
~ and I want to be careful about how I talk about him because there's a
33:35
way of doing it that turns a person into a prop.
33:38
A sad photo, the face of the crisis.
33:40
The Native American on the side of the road with the trash being thrown at his feet.
33:44
Look, I hate that. This guy's not a symbol,
33:47
he's a guy with a truck and a note.
33:48
So let's just look at what he actually did,
33:50
decision by decision, because his choices are the most articulate thing
33:53
in this episode. He tightened his fuel strategy.
33:56
That sounds like nothing. It's not nothing.
33:58
That means planning routes around where deep diesel is cheapest.
34:01
It means adding miles to save cents,
34:03
which means more hours behind the wheel for the same money.
34:06
It means running the truck efficiently,
34:08
slower, easier on the throttle.
34:09
It means his day got longer and his driving got more tedious to preserve
34:13
a margin that used to just exist.
34:14
Then he stopped washing the truck.
34:18
Hundred and thirty bucks a pot.
34:19
Yeah. So the we'll stop on the truck wash because when I read that,
34:24
I I I thought, okay, I mean that's that's small,
34:26
right? Like when it comes to actual profits,
34:28
that's a rounding error. And then i it started it kind of s stuck with
34:34
me and I started thinking about that.
34:35
Like
34:37
You know?
34:38
It's not about the dirt.
34:39
Right. A clean truck is a business asset,
34:42
right? Like it's how you look i pulling up into a shipper's truckyard
34:47
and whether the broker thinks you're a professional or a guy who's just kind
34:52
of surviving, you know, o out there on your own in this dirty,
34:56
dirty world.
34:58
Appearance is credibility in a business where everybody's kind of a stranger
35:02
to each other and reputation moves by phone call.
35:06
So cutting the truck wash isn't really frugality.
35:09
It's like mortgag mortgaging your credibility to make this month's gas bill,
35:15
you know, credit card payment or whatever.
35:17
It's the exact kind of trade you make when you're drowning because you're going
35:22
under slowly. You sell the future to buy the right now.
35:27
Right, like you stop dry cleaning your your shirts or suits for
35:31
a white collar worker, you know.
35:32
~ basically ~ tightening the straps,
35:35
right? Tightening your belt loop,
35:36
as they say. And the third thing,
35:38
~ Mr. Lloyd is pushing brokers for extra pay on loads.
35:41
Now, this is where it really starts to affect your career.
35:43
Remember what we said in the first act?
35:45
There's no mandated fuel surcharge anymore.
35:48
The ICC rule that came out of the 74 and 79 shutdowns,
35:52
that world is gone.
35:54
So this isn't some form that he fills out to get reimbursed.
35:57
This is him on the phone asking a broker for more money,
35:59
one load at a time, knowing the broker has a list of other trucks he's gonna call.
36:03
And the broker knows he knows.
36:06
Right, and that's the whole negotiation.
36:07
I mean, it happens in about four seconds and it's decided before it starts.
36:11
And the fourth thing is the one that actually maps the damage.
36:14
He's rejecting loads from New England.
36:18
Think about what that means geographically,
36:20
right? He's in Richmond. The Northeast Corridor is his natural market.
36:25
Boston, Providence, Hartford. That's where the freight is.
36:28
That's where the density is. And the fuel math is it just no longer closes
36:34
on those lanes. Partly because New England is expensive to run in.
36:38
Partly because of what he'd have to eat on the backhaul.
36:41
So his map shrank. A guy with a national capable asset is now running
36:47
a regional business because of a straight seven thousand miles away from him.
36:52
And nobody recorded that. There's no statistic that captures Christopher Lloyd's
36:56
addressable market got smaller.
36:58
It'll show up eventually as a rate increase in Boston,
37:00
and somebody will write a story about Boston grocery prices,
37:03
but it'll never connect back to Mr.
37:05
Lloyd.
37:06
Yeah, definitely never.
37:07
So Todd Spencer is the one trying to make the connection.
37:09
He runs Uida. Forgive us if that's ~ Mr.
37:14
Spencer
37:14
I it makes me laugh every time I see it.
37:14
if we're s we're butchering that.
37:15
~
37:17
the association founded in 1973 for exactly this by drivers who
37:21
got flattened by exactly this situation.
37:23
And what Spencer's out there saying in 2026 is two things.
37:26
One, fuel costs don't stay in trucking.
37:29
They ride the freight into this the food supply.
37:31
The diesel price is a grocery price with a delay on it.
37:34
And two, the harder thing.
37:36
Today's drivers don't have the protections their predecessors bled for.
37:39
The shutdowns in seventy three,
37:41
seventy four, seventy-nine. Guys parked their trucks,
37:45
which for an owner operator means voluntarily earning zero dollars for as long
37:48
as it takes with a note due. And they won a mandated surcharge.
37:53
It was real, and then it was deregulated away,
37:56
and now Christopher Lloyd is doing it one phone call at a time.
37:58
Yeah, I I I want to be honest about this too,
38:01
because I grew up poor and I have a reflex I I don't fully trust.
38:06
My reflex is is organize. Get the drivers together,
38:10
shut down the I-95, you know, force the surcharge back.
38:15
Because it worked before, right?
38:17
I mean it's documented. It worked in nineteen seventy four and it worked
38:20
in nineteen seventy nine. But it worked in nineteen seventy four
38:23
in an industry where a federal regulator existed to make the rules.
38:28
And it doesn't now. And the freight market is fragmented in a way that
38:32
it it wasn't really fragmented then.
38:33
And half of the drivers on the road are on a lease purchase deal where their truck
38:38
belongs to the carrier. And shutting down just means losing their their truck.
38:43
So an honest version is the tactic that worked has had all
38:48
of the preconditions removed. Deliberately.
38:51
I mean over forty years. So I'm not gonna stand here and tell a guy
38:55
in Richmond to park his truck.
38:57
When I know exactly what the note on it costs.
39:00
And I think that's the right kind of honesty.
39:01
I mean, I guess you what you're telling our our listeners here is that there's
39:06
no more federal regulators, so this is really the result of deregulation
39:10
in its purest form. This is what everybody wants,
39:12
but this is what happens. You deregulate and there's nobody around to make it right.
39:16
~ but I want to add a third name from this story because he's on the other side
39:19
of the water, and I don't want us to only count Americans.
39:21
We have Ali Reza Tangziri, the IRGC naval commander.
39:27
He's the man who ran the mining and the blockade of the strait.
39:29
He's not a sympathetic figure.
39:31
He made choices that burn ships and put civilian crews in the water.
39:34
And Israel killed him.
39:36
During the campaign
39:38
during the campaign and the mines are still there.
39:40
So you read these stories about top leaders being assassinated or or killed,
39:45
the mines aren't going anywhere.
39:47
The corridor still has to be swept and escorted.
39:50
Not one single barrel moved differently because that man died.
39:53
That's the thing about this decapitation as a strategy.
39:56
It is satisfying and it's measurable and you can put it on a slide.
40:02
Target is neutralized and the and the the bomb in the water does not know.
40:07
And I say his name for one reason.
40:08
Because the 170 people near Bandar Abbas who don't have names in the reporting,
40:13
I can read. Tangziri does because he was important.
40:16
The kids at the school were not important according to the global global metric,
40:19
right? Nobody's looking for more news on that.
40:21
So they become a number. And that number is 170.
40:25
But that's not a rhetorical flourish.
40:26
That's just what the record looks like.
40:27
And it's worth noticing that the record,
40:29
what the record chooses to keep.
40:31
It
40:31
is. And connected back because it does connect,
40:35
Christopher Lloyd's truck wash and a hundred and seventy people near Bandar Abbas
40:40
are not the same thing. And I I'm not going to pretend that they are,
40:44
but they are the same category of thing in a system that exploits in this way.
40:50
The costs don't really appear on the on the bill,
40:55
on the ledger that anybody actually reads.
40:59
The ledger everybody reads says,
41:01
~ well, twelve point one billion,
41:03
largest quarter in company history.
41:06
It's disciplined investment.
41:08
So here's the through line, and I want to state it as plainly as I can.
41:12
Choke points don't get resolved,
41:14
they get managed. And they get managed at whatever level of pain
41:18
the domestic political system can absorb without breaking.
41:21
That's it. That's the pattern.
41:23
1987 Reagan puts American flags on Kuwaiti tankers,
41:27
sends the Navy in to escort them through mined water,
41:30
a workaround layered onto somebody else's war,
41:33
designed to keep the oil moving without anyone having to decide anything.
41:37
2026, the Navy escorts a corridor along Oman that leaks six to ten million barrels
41:42
a day. Same architecture, different flags.
41:45
And what I've come to, and it took me a while because it's
41:48
a little bit counterintuitive,
41:50
the workaround is worse than the crisis would have been.
41:53
Like if Hormoes had actually closed,
41:56
like fully closed, zero barrels of oil at two hundred dollars a barrel,
42:00
this war would have been over in a week.
42:02
Not because anyone would somehow develop a conscience sitting at the
42:07
top of their that executive order,
42:08
because the pain
42:11
would be concentrated and immediate and completely unignorable,
42:15
and phones in Washington would melt.
42:18
Crisis creates urgency,
42:21
and urgency creates resolution.
42:24
The leak prevents the crisis. And by preventing the crisis,
42:29
it's preventing the resolution.
42:31
So we get years of four dollar gas and five dollar diesel instead of
42:35
six weeks of eight dollar gas and then ~ you know a deal gets struck.
42:40
The overflow valve that saves you is also the one that traps you.
42:43
That's right. And nobody chose that,
42:45
except one guy with an executive order.
42:48
And I I'll keep coming back to that.
42:50
There is no villain who designed the outcome.
42:54
There's a villain who made the decision to begin,
42:58
but it's an emergent property of a system where diffuse pain
43:02
is politically survivable and concentrated pain is just not.
43:07
And that's the part I want everyone to hold on to because it's
43:09
the part that's hardest to be angry at properly.
43:11
We can get angry at Pete Hagsath saying it takes money to kill bad guys.
43:15
About a $200 billion request for a war that the Congress never authorized.
43:19
That's easy anger, and it's earned.
43:21
You can be angry at Mike Worth,
43:23
calling a $9.6 billion profit swing disciplined investment.
43:27
Also earned, also easy. But the thing actually doing the damage isn't a person.
43:32
It's an arrangement in which every individual actor is behaving rationally within
43:35
their incentives.
43:37
And the aggregate result is a war that runs deep into 2027 because ending
43:42
it is an urgent to anybody who could do it.
43:44
Second through line, and it kind of stacks right on top of that.
43:46
The windfall. Every time a choke point war happens.
43:52
A very small number of companies get very rich automatically without doing
43:57
a damn thing different. Twenty twenty two Ukraine,
44:00
Exxon Mobil books seventy-seven point eight billion dollars,
44:06
two hundred and forty-nine percent of the prior year.
44:09
Twenty twenty six Iran, Exxon and Chevron together.
44:13
Twenty-six and a half billion in a single quarter.
44:17
That's just three months.
44:18
And Wood Mackenzie says four hundred and ninety five billion globally across this
44:24
year. Meanwhile, the same event cost Christopher Lloyd his New England lanes.
44:30
And there's a symmetry there that I find genuinely obscene.
44:33
And I use that word selectively.
44:35
The oil companies get a windfall they did not anticipate and did not earn.
44:39
The truckers get a shortfall they did not anticipate and did not earn.
44:43
Same event, same mechanism, opposite signs.
44:47
And there's no channel between them.
44:49
Not one. The money doesn't flow from the winners to the losers
44:52
of the identical event, and the bills that would build that channel are gonna
44:56
die in committee.
44:57
Third one, and this is kind of the cornerstone of all of it.
45:01
None of this was authorized. Nine hundred strikes in twelve hours ahead
45:07
of state killed a naval blockade one hundred seventy two million barrels
45:12
out of the Strategic Reserve, two hundred billion dollars in an IOU,
45:18
I guess, and one hundred and seventy people dead in a school in Iran,
45:22
and Congress dead.
45:24
has
45:25
still never voted to start any of it.
45:28
What Congress did was vote twice to say that Congress would prefer
45:33
if this would stop.
45:35
two hundred and fifteen to two hundred and eight,
45:36
two hundred and fourteen to two hundred eight,
45:38
non binding resolution.
45:41
And the bill for the thing they didn't authorize is enormous and mostly invisible.
45:45
Linda Bilms, the Harvard economist who did the real accounting
45:49
on Iraq and Afghanistan, numbers everyone eventually admitted were right,
45:52
puts the direct cost at something north of $71.8 billion within the first 60 days,
45:59
excluding fuel. So I had over $40 billion in public fuel costs on top of that.
46:06
And then the part that nobody budgets.
46:09
veteran's care and interest. Film's entire career is showing that those
46:13
two lines are where the real money is,
46:15
and they arrived decades later,
46:16
long after the vote that nobody took.
46:19
So we're gonna be paying for February twenty eighth,
46:21
twenty twenty six into the twenty sixties.
46:24
That's not hyperbole, that's just how the amortization works.
46:28
So put the three together and this is what you get award nobody authorized,
46:31
funded by money nobody appropriated in advance,
46:34
sustained by an oil leak that keeps it comfortable,
46:38
paid for by a trucker and a shopper at a shop at a register in Ohio,
46:44
and by the rest of us every time we fill up our car,
46:47
and profited from by only two companies that describe the whole thing
46:53
as discipline deep into twenty twenty seven.
46:57
Deep into twenty twenty seven.
46:59
Alright, so here's what you should pay attention to on the news or wherever
47:04
you get your your sources from,
47:06
w whether that be, you know, insert sponsor here or not.
47:11
Watch the barrels. Like specifically,
47:15
watch what six to ten million barrels a day through the Omanc corridor looks like.
47:20
Because that number is the the real policy.
47:23
That's the the litmus test, the dial,
47:25
if you will.
47:26
If it goes up, the price falls,
47:28
and the war gets more comfortable,
47:29
and the war lasts longer. If it goes down,
47:32
the price spikes and something breaks.
47:35
That single figure tells you more about how long this goes on than
47:39
any statement out of the White House.
47:41
And then watch the number ninety.
47:43
ninety to one hundred dollars a barrel.
47:46
That's the sweet spot that analysts say has to hold for the current posture
47:52
to survive the midterms. So when crude crosses it
47:56
A strategy will have to change,
47:58
not the values, the strategy.
48:01
And I'll just add here, watch the refill.
48:02
Because the strategic petroleum reserve is at its lowest since 1982.
48:07
That's my whole life as well. And headed toward 243 million barrels.
48:13
And at some point, Chris Wright's department has to start buying it back
48:17
in a high market with a war on.
48:19
Watch who gets those contracts and what price the taxpayers pay
48:23
per barrel to restock the thing we just spent to hold gas under five bucks through
48:28
an election.
48:29
That's where the second theft happens,
48:30
not in the drawdown, in the refill.
48:33
Now,
48:34
are you ready for the most absurd thing in this entire story?
48:37
It's not the two hundred billion.
48:40
It's not the it takes money to kill bad guys.
48:43
Which is a sentence I still can't fully believe that an like a human being that
48:48
was appointed by someone that our country elected out loud.
48:52
It's this The thing keeping the war going is that the oil is still flowing.
48:58
The leak is
49:00
Is this whole life support system behind this Iranian war?
49:03
If Hormuz would actually close,
49:06
this would be done. It would be over.
49:08
It's half open, so it's forever,
49:12
which Trump specifically said he wanted to stop forever wars.
49:17
Hmm. Maybe maybe everybody else's Forever Wars.
49:20
Not his own. but we built an overflow valve to relieve the pressure
49:23
and the pressure was the only thing that was ever gonna end it.
49:26
That's it. That's basically the entire episode in one line.
49:30
Three things you can actually do,
49:31
and none of them involve a phone call to your senator.
49:33
~ one, learn to read the EIA weekly petroleum status report.
49:38
Comes out every Wednesday morning.
49:39
It's free, it's public. It contains the SPR level,
49:42
crude imports, and refinery utilization.
49:45
20 minutes with it once, and you'll never again need a cable news talking head
49:51
to tell you whether an energy story is real.
49:53
You'll see the number before the narrative gets built on top of it.
49:57
Two,
49:57
and this one's specifically for anybody who owns a small business that burns fuel
50:01
or ships anything, trucker, contractor,
50:04
caterer, florist, anybody. Put a fuel escalator in your contract,
50:10
like write it in. Index it to the Department of Energy's weekly
50:14
on highway diesel average published every Monday with a defined trigger
50:19
and a defined pass through. Not a conversation you have when the prices spike,
50:23
a clause you signed before they did.
50:26
That's the nineteen seventy four rule,
50:29
basically rebuilt privately one contract at a time,
50:32
because the federal version got deregulated out of existence.
50:35
We we know that. Christopher Lloyd is negotiating for that on the phone,
50:39
load by load, and losing because it's not written down.
50:43
It's not in the contract. It's not written anywhere there.
50:45
So write it down and put it in your contracts.
50:48
it doesn't cost anything. And yeah.
50:52
That's the whole trick, I think,
50:53
The three? Yeah,
50:53
yeah?
50:55
I think so. Third and finally,
50:57
let's go find the actual text of the supplemental appropriation when
51:00
it moves and skip the transfer authority sections.
51:03
Not the headline number, the transfer authority,
51:06
the language that lets money move between accounts after it's appropriated.
51:09
That's where a war that Congress never authorized gets funded by money that Congress
51:13
technically approved for something else.
51:14
It's boring, it's buried, but it's the whole magic trick.
51:19
Congressional
51:20
appropriations text is public and searchable and nobody reads it,
51:23
which is precisely why it works.
51:26
Right, buried in the boredom.
51:27
Ugh, tell me about it. Look, so that's it.
51:31
you know you can find us on FOF dot foundation.
51:34
~ everything that we, you know,
51:36
talked about today will be in the notes.
51:38
the fortune piece from the twenty third,
51:40
the GAO report, you know, war powers roll call with the names,
51:43
whatever. ~ make sure that you are telling a friend,
51:46
right, that about our podcast if you want us to grow,
51:50
or if you want to do us a favor,
51:51
rate us five stars there on wherever whatever app you're listening to this on,
51:55
right?
51:56
Right. And if you're driving while you listen to this and you just watch
51:58
the pump roll past ninety dollars for a fill up and felt that little jolt
52:02
of resignation.
52:03
That's not resignation. That's a data point.
52:06
It's the only part of this whole machine you actually get to see with your own eyes.
52:10
That's discipline managed refilling.
52:12
Take care of
52:13
Ugh.
52:13
each other, everybody.
52:14
See you next week. Bye.
52:16
Bye.