This won’t last long. The biggest risk is a Fed error mistaking an oil shock for inflation.
Don Luskin on the Wall Street Journal Editorial Report on Fox
Saturday, March 7, 2026
Don Luskin talks with Paul Gigot about oil prices, closing the Straits of Hormuz, inflation and recession.
Update to Strategic View
The oil price is up 50% this year, but it rose 150% in the First Gulf War in 1991. Over the 35 years since then, the US is only half as dependent on oil to produce a unit of GDP. So the impact of this oil shock is only one-sixth of the one in 1991, which caused a recession. Iran cannot keep the Straits of Hormuz closed because it can barely function. Iran has so allies in the Middle East, or among Russia and China. The worst risk is that the Fed will wrongly interpret a price change in a single commodity as "inflation," and will raise rates to fight it.