Marketplace - A shock to the oil system

Episode Date: March 23, 2026

The war in Iran has cost the global oil supply roughly 15 million barrels a day so far. Today, International Energy Agency executive director Fatih Birol said the war’s impact on oil is worse than the two oil shocks of the 1970s, combined. On today’s episode, a look at how long this shock could last. Plus, how skyrocketing natural gas prices will impact U.S. data centers, and why the stock market isn't “baking in” the long-term impacts of the war with Iran. Also, a journey to Beaver County, Pennsylvania, a former steel hub looking toward a different kind of industry — with middling results.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.

There's a lot going on right now. Mounting economic inequality, threats to democracy, environmental disaster, the sour stench of chaos in the air. I'm Brooke Gladstone, host of WNYC's On the Media. Want to understand the reasons and the meanings of the narratives that led us here and maybe how to head them off at the past? That's on the media's specialty. Take a listen wherever you get your podcasts. We understand that work, family, and education is a balancing act. With 24-7 online access, monthly start dates, and an adjustable course load, our flexible delivery options let you tailor your program to fit your life's busy demands. Open your options with a more flexible online degree and choose an education that works for you, not the other way around.

Find out how at Athabascau.cau.cau.ca.ca.com. All right, what if, and just hear me out now, what if the markets are an idiot from American public media? This is Marketplace. In Los Angeles, I'm Colin Risdell. It is Monday. Today, this one is the 23rd of March good, as always, to have you along, everybody. All right, it was perhaps a little bit harsh to characterize the market's reaction to the news of the day. I just did, because it does make some sense, after all, for traders in their algorithms to react

to presidential promises that things are going to get better, whatever the actual facts might show. But one cannot help but wonder whether the markers of market-based capitalism that we use might be just a bit too focused on the short term. That is, that they haven't priced in the long-run economic challenges that this war is going to bring. Robin Brooks is a senior fellow at the Brookings institution. Robin, it's good to have it back on the program. Great to be back, Kai. All right, test my premise. Do you think markets are not, as I said, pricing in the long-term challenges, no matter what the president happens to say on any given day? So I think there's two big questions, and I think the question you're asking is totally valid. The first question is

what just happened? On Friday, we were de-escalating. On Saturday, we were escalating. We were going to bomb power plants in Iran. This morning, we're de-escalating again. And I think it's worth thinking about, you know, how much weight should the market put on any one pronouncement. The whole thing reminds me of the tariffs standoff with China a year ago when tariffs went to 150 percent. And for a while, the president was almost negotiating with themselves, escalating, de-escalating. And ultimately, that ended up with China kind of winning that standoff. And perhaps that's what's going to happen here too. Iran will kind of emerge with the upper hand. And I think that's kind of what the market is betting on that Trump is backing off and

kind of doing a taco, as people say. The other question, obviously, that you're also getting to is, you know, is there not enough lasting damage to the economy for the stock market to rally today? So we can discuss that next maybe. Well, let's go ahead and go that. What do you suppose the lasting damage factor might be? You know, because for every day this thing goes on, it will take, I don't know, I'm making this number up, but it's going to take a week, 10 days to unpack it, you know? Oh, totally.

So I think there's two things going on, right? oil prices, which obviously impact prices at the pump, and that's incredibly important for the U.S. consumer. You know, oil prices are a function of two things, a physical shortfall in the market now. So that's the de facto closure of the Strait of Hormuz or severe encumberment. And then second of all, there's a big expectations component, which is basically the market guessing, how long will it take for the straight of Hormuz to reopen tomorrow, the week after, the month after, three months from now? And today, the market basically said, okay, this pronouncement from the president means this conflict is going to be a lot shorter. And so therefore, my expectations component, I'm going to rein that in.

And so that's the reason that the market rallied today. One hates to bring J. Powell into the conversation seemingly unnecessarily, but the word that comes to, to the word that with apologies to chair pal, the word that comes to mind here is transient, right? Powell got in trouble in the post-pandemic period and in the pandemic period saying that inflation was going to be transitory. And it does seem to me that people writ large are expecting the economic fallout from this war to be transient.

You know what I mean? That it's not going to endure. And I wonder if you agree, because, you know, once prices go up, whatever the cause, they're really slow to come down. Yeah, Kai. I think that's a really important point. I think we all have a little bit of trauma from 2021 and 2022 when inflation rose so much after a decade when inflation was almost written off.

And, of course, the Federal Reserve also was slow to recognize that inflation shock. But I think a bunch of things are different now. 2021, 2022, we were obviously recovering from COVID. The global economy was gunning. that's not at all the situation now. We don't have the kind of fiscal stimulus that we had then. And so the global economic picture is genuinely weaker now. And if at the end of the day we're talking about a conflict that is a matter of one month or something like that, then I think the case for transitory is stronger. 30 seconds to answer this next question. What do you think is the bigger threat as it stands right now? The inflation threat? or the threat to global growth. Definitely the threat to global growth.

We are in a relatively good position because we're a net oil exporter. But Europe, for example, not only is getting hit by oil prices, but also a big spike in natural gas prices, so that's really bad news for others. Robin Brooks, senior fellow at the Brookings Institution. Thanks, Robin. It's always good to pick your brain.

Great to chat with you, Kai. Traders today, as I said, what? Me worry? We'll have the details when we do the numbers. Listeners of a certain age might remember the last big oil shock in this country, the embargoes of the 1970s. And listeners, a good deal younger, are going to remember the last global energy shock when Russia invaded Ukraine. Well, today, the head of the International Energy Agency said that already just 24 days into this war, the impact is worse than those two historical references.

Marketplace's Samantha Fields explains what that might mean. If you were old enough to drive in 1973 during the OPEC oil embargo or in 1979 during the Iranian Revolution, you might remember gas shortages and long lines to fill up your tank. Each of those took about 5 million barrels a day of oil supply off of the market. Samantha Gross at the Brookings Institution says today, with the Strait of Hormuz largely closed, We've lost maybe 15 million barrels a day or 15% of supply. So this supply shock is three times bigger than the ones that we saw in the 1970s. This is also not the 1970s.

United States now is less dependent on oil imports than we were 50 years ago. Hugh Daigle at the University of Texas at Austin says that's why gas prices here are spiking, but we're not seeing shortages. But countries like, Pakistan, India, Thailand, China, Japan, they are really being hurt by this. Because they are more dependent on oil from the Gulf. Many Asian and Western European countries also rely heavily now on liquefied natural gas or LNG from the region.

This goes back to what happened in 2022 with Russia invading Ukraine. Western Europe said, hey, we can't be so dependent on Russian gas anymore. And so they started importing a lot more of LNG. And now that infrastructure has been damaged. And some of that damage to gas and oil infrastructure could take years to repair. Clayton Siegel at the Center for Strategic and International Studies says how deep and lasting the global economic damage from all of this is will depend on how long the war lasts. You could be looking at a return of a very negative theme that we had from back in the 1970s,

which is the so-called stagflation, a perfect storm of lower economic activity and higher general prices. It can last for a long time. I'm Samantha Fields for Marketplace. As Robin and I were talking about a minute ago, and as Sam just pointed out, the global energy shock from this war could take months to years to repair, even if the fighting stopped today. And that's going to leave some economic scars.

If there is one industry that we know is extremely energy hungry, it's artificial intelligence. Natural gas is the most important. fuel for the data centers that are powering that AI boom, and the global market for natural gas has been upended, one might say, at the very least. Marketplace's Megan McCarty-Kerino has more on how that's all going to play out. The U.S. has plenty of its own natural gas. We're a net exporter. But with global prices rising, you'd expect producers to try to export more, reducing the supply at home, says Ken Medlock, who directs the Center for Energy Studies at Rice University.

However, we have been effectively operating our LNG export capacity at as close to full as possible. We simply cannot export anymore. Natural gas has to be liquefied before it's loaded onto ships for transport. And the facilities in the U.S. that do that are maxed out. Right now, that cap on capacity basically acts like a wall between the international marketplace and the U.S. marketplace. He says it would take years of investment to expand export infrastructure and even, And then domestic prices for data center energy would likely remain low. Ira Joseph at the Center on Global Energy Policy at Columbia says our gas surplus could end up supercharging demand for U.S. data centers even more.

You know, rather than building them in the Middle East or in Europe or somewhere else in the world that may or may not have cheap gas. But there's a byproduct of natural gas production that could affect AI, at least in the short term, helium. Yeah, the gas you fill balloons with. Phil Cornbluth is a helium industry consultant. Helium has a number of unique physical properties that make it indispensable for a semiconductor chip manufacturing, which is the largest application for helium. Chips are also the single largest budget item for AI data centers, and the plants that manufacture them in South Korea and Taiwan get most of their helium from the Middle East.

Those first few months before the supply chain gets reconfigured are going to be challenging. and everybody is going to be subject to either price surcharges or price increases. Cornblis says helium doesn't contribute much to the overall cost of semiconductors, but a lengthy disruption could leave supplies a little light. I'm Megan McCarty Carrino for Marketplace. If you happen to be a perspicacious shopper, you've perhaps already noticed at your local Kroger or Best Buy maybe that there are electronic price labels on some of those store shops.

shelves. They are, we're told, the next big thing in retail. But in keeping with the truism, that nothing is a done deal in retail until Walmart says it is, the news the other day that that company is going to roll out electronic price labels in all of its U.S. locations within the next year has put them on the fast track. Marketplace's Kristen Schwab has more on that one. The average Walmart Supercenter is nearly 180,000 square feet, bigger than three football fields. And it carries something like 120,000 items. each with its own price. Joe Feldman is a retail analyst at Telsi Advisory Group.

Think about the amount of labor hours it takes to go and change the labels with stickers. Electronic price labels replace manual labor with the click of a button. And Feldman says there are other time-saving advantages. Workers can use an app to identify shelves that need attention. It could light up in a different color or flash or something, and it would notify employees that they need to be restocking this. particular item or that particular item. Electronic prices will allow Walmart to not just change prices more easily, but whenever it

wants. The company says it will only do this outside of shopping hours, so the cost of toothpaste can't go up between when you grab it from the shelf and when you check out. Still, Phil Lempart, a food industry analyst, says commodities like eggs, meat, and coffee fluctuate daily. We've got lots of disruption, whether it's about labor, whether it's about fuel. And as a result, those costs are going to go up. Walmart also says it will not use digital stickers for surveillance pricing, when different prices are set for each individual based on their data. But Lempart thinks this is where retail is going.

Once that technology is on the shelf, who knows? Consumers are wary of these features, so companies have to be careful with how they roll them out, says John Zang, a marketing professor at Wharton. If Walmart want to do this well, they have to do it in steps. A little consumer education, a lot of positive PR. You could actually do better promotions. You can set better prices. And get consumers more comfortable with the idea that electronic stickers can mean prices could easily go up, but they could also go down.

I'm Kristen Schwab for Marketplace. Coming up. My very great friend, Tony Vanilla, he owns a wood shop in northwest Portland. You know, Tony. But first, let's do the numbers. Yeah, there's a little number we like to call the sad, happy music, because, come on, read the room, right? Dow Industrial's up 631. Today, 1.4% finished at 46,208.

The NASDAQ advanced 299 points. 1.4% 21,946. The S&P 500 gained 74 points, about 1.1%. 65 and 81. Kristen Schwab was just telling us about how Walmart's digital price labels are the new, new thing. Walmart picked up 1.4%. Today elsewhere in American retail target, charged up 1.5%. Kroger, whose subsidiaries, in case you didn't know, include King Supers, Ralphs, Fred Meyer, and Food for Less, chopped off three quarters of 1%.

Amazon MGM Studios had its first big box office hit with the sci-fi film Project Hell Mary this weekend, earned an 8,000,000,000,000. million dollars in the U.S. and Canada. I will tell you. I saw it. Love the book. Kind of me on the movie. Don't at me. Bonds up. Yield on the tenure T-note down. 4.35% you're listening to marketplace. There's a lot going on right now. Mounting economic inequality, threats to democracy, environmental disaster, the sour stench of chaos in the air. I'm Brooke Gladstone, host of WNYCs on the media. Want to understand. the reasons and the meanings of the narratives that led us here, and maybe how to head them off at the pass,

that's on the media's specialty. Take a listen wherever you get your podcasts. This is Marketplace. I'm Kai Rizdahl. Once upon a time, Beaver County, Pennsylvania, just northwest of Pittsburgh, was steel country. The people who lived there made the steel that was used in the Empire State Building and in military hardware going back 100 years.

But the last steel mill, Beaver County closed decades ago. The population's been falling since 1970 and the economy in the way these things go has suffered accordingly. There has been a glimpse of hope or two over the past handful of years, but as Marketplaces Kelly Wells reports, nothing has really ever paid off. Daniel Rossi Keene has lived in Beaver County for 15 years.

He runs a local community development nonprofit called Riverwise. He's touring me through small town after small town along the Ohio River, passed lots of people in Pittsburgh Steelers beanies, plus boarded up storefronts and closed down factories and power plants. It's like in West Virginia, you know, can we just get back to coal? You know, it's like in Detroit, can we just make cars in America again? That sensibility is very strong. 14 years ago, some residents were convinced that a new plant would reverse Beaver County's decline. It's the height of the shale boom.

Pennsylvania and neighboring states were one of the largest sources of natural gas in the whole country. And Shell announces it's going to build a plant that turns that gas into the plastic you'd find in water bottles and toys and car parts right in Beaver County. Everything's going to change. I mean, Shell officials stood up and said, when we turn the lights on at that facility, you'll never recognize your community again. There will be new jobs and tax revenue and prosperity, just like the old days, but instead of steel, it's plastic. The Commonwealth of Pennsylvania granted a $1.65 billion tax break, the largest in its history. Beaver County resident Jolene Atkins says her neighbors were thrilled. What I've learned about this area because of the steel boom and then the steel decline,

I can understand why it sounded like such a great addition to the county. Years of construction brought in thousands of new, temporary jobs. The plant is a giant lattice of pipes with a line of stacks billowing white plumes on one side. It's a bit sci-fi. But since it opened in 2022, it doesn't, I don't know, it just kind of doesn't seem like the employment cash cow that it was supposed to be. The American Chemistry Council, a trade group, estimated that plants like this one in Beaver County generate more than 17,000 direct and indirect jobs. Shell said in a statement that it employs 500 people full-time and 400 contractors. The plant has faced millions of dollars in penalties for environmental violations, several local news outlets,

say Shell is trying to sell the plant, although it wouldn't confirm that. Meanwhile, incomes for Beaver County residents are down and reliance on food assistance is up. If the argument was that this was going to be a rising tide that lifted all boats, a lot of boats are doing worse off than they were in 2012. Nick Messinger, senior economist at the think tank the Ohio River Valley Institute, says Shell's plant has been a bust for a few reasons. Other companies built new plants like shells, so there's a glut of production capacity. Meanwhile, more of us opted for reusable water bottles instead of the single-use ones made from the plant's plastic. He also says this idea of a community putting all its proverbial eggs in one

basket might have worked in the age of the steel plants, but not a great bet today. A lot of the economics research indicates that small businesses are actually, and local businesses are actually the number one job creator in the country anywhere you go. And that is precisely the insight that's guiding Daniel Rossi Keen of the local development nonprofit Riverwise. He's a small business owner himself. He owns a bookstore. He's employed dozens of people and written thousands of paychecks. Not a single person has gotten wealthy as a result of that, but we've managed to create a local business and employ folks. On our driving tour, he stops by a metal scrap drop-off site run by a nonprofit he's partnered with. It uses the scrap to repair bicycles, then it gives them to children.

It's not a $14-15 billion investment. Well, you start to stack these things up piece by piece by piece by piece by piece. You know, his operation, modest as it is, generates north of a million dollars a year in economic output for Beaver County. Output, which is almost entirely invested back into Beaver County. In a statement, Shell said its plant, quote, continues to deliver ongoing economic value in the Commonwealth. In Beaver County, Pennsylvania, I'm Kaylee Wells for Marketplace. We talk to small business owners on this program a lot. And one of the things we have heard this year a lot is that between tariffs, now the

president's war with Iran, on top of all the usual challenges that come with running a small business, is how hard it has been to plan for the future. That's especially true for Matt Wicker. He owns Wicker Woodworks. That's a furniture company in Portland, Oregon. and six months ago, his workshop burned down. There's a ton of uncertainty after the whole fire, you know, with whether we were going to get insurance payouts

if we were going to be held liable for anything and get sued to death or if we were even going to be able to continue. We probably lost a quarter million dollars worth of stuff in the fire. We got a whopping $75,000 from the insurance company, which covered about a quarter of what we needed to really come back. So we had to kind of think on our feet to figure out a strategy that would be way less capital intensive, but still produce quality products at the level we needed to be produced.

So around the end of October is when we started working with some local manufacturers to help produce the product. My very great friend, Tony Vanilla, he owns a wood shop in northwest Portland and he was the first one to call me and say, yo, let's get this done. And then the other one I found through my wood supplier, Emerson Hardwoods,

I just kind of called my rep and was like, hey, do you know anybody who might be interested in doing this? And maybe six hours later, I get a call from the owner of this shop and we started off. So our first immediate challenge was to build 200 pieces as fast as possible. We got it done in about six weeks, which was pretty amazing. That was kind of a huge accomplishment and kind of helped us, helped, you know, feel like everything was going to be all right.

Our capacity before the fire was about 100 a week, and now we can do around 150 to 200 a week, which is really great because, you know, before we would have to kind of temper sales because we had to make sure that we could still make everything in a timely manner. and now it's kind of given us the ability to kind of blow the doors wide open. Starting December to this year, we're right back up to previous fire levels for sales, which is a huge relief because one of the things I was worried about is if we disappear from the world, are we going to be able to come back to where and match what we were doing? And it seems like we were not only on the path to match what we were doing, but we're on the path to grow from that too. Matt Wicker there. He is the proprietor of Wicker Woodworks in Portland, Oregon.

This final note on the way out today in which equities traders do not have a monopoly on short-term thinking. Crude oil today, the global benchmark Brent North Sea, down 10% $100.6 a barrel. Check back here tomorrow, though, because you never know what the news is going to bring. Amir Babawi, Caitlin Ash. Noy Carr and Stephanie Seek are the Marketplace editing staff. Kelly Silvera is the news director. I'm Kyle Risdahl. We will see you tomorrow, everybody. This is APM.

You can turn to Marketplace to hear from powerful leaders and everyday people about the economy and their roles in it. And now we hope we can turn to you. Marketplace is facing real threats and challenges as we plan for the future. As a public media program, donations from you are a critical part of our budget. So here's one action you can. take right now that's going to have a long lasting impact. Start a monthly donation to support our work. Five bucks a month

is a great place to start. Head to Marketplace.org slash donate. And thanks.