America may be a petrostate. But the energy shock still hurts

For Americans of a certain age, and macroeconomists of all ages, the 1970s carry a lingering trauma. Then as now, petrol prices spiked after tumult in the Middle East. Inflation soared; growth slumped. Cars queued at parched petrol stations and the ugly word “stagflation” entered the vernacular. The parallels to Donald Trump’s war in Iran hardly need drawing. Nearly three weeks after American and Israeli bombs started falling on Tehran, oil prices are up by half and the Strait of Hormuz, through which a fifth of the world’s crude normally passes, is all but shut.

For all the historical rhymes, that era is not an ideal guide to the present day. The shale-fracking revolution ignited in the 2010s turned America from a net importer of energy to a net exporter by 2019, for the first time in more than 60 years (see chart 1). In recent years American liquefied natural gas (LNG) has started supplying global markets, too. Uncle Sam now ships lots of both oil and gas abroad. Before the war Europe was getting more than half its LNG from across the Atlantic. At regasification terminals around the continent, European pain is transmuted into American profit.