$100 oil

Besides econo cars and polyester flare-bottomed pants, the early Seventies gave us stagflation. It also sucked.

There was an oil embargo. Gas was rationed. The US president took a hit. Things cost a lot more at the same time jobs were vanishing. It was rough going for a young couple to be untethered from university and thrown into a world of declining expectations. By Christmas of 1973 the inflation rate in Canada was a withering 9.8% – four hundred per cent greater than now. But that’s what Dorothy and I faced.

She decided to stay in school and try to become a teacher. Seemed safe. I hit the road, finally finding a job reporting for a small daily paper three hours away, paying $100 a week.

We survived. You can endure heaps when young. But stagflation hurt many – being the combination rising inflation, stagnant economic growth and swelling unemployment.

In the past three days the talk of this rare and damaging condition has bubbled back, thanks to the American president, the Israeli prime minister and their war of choice on Iran. That’s resulted in the destruction of energy infrastructure, curtailed oil production, a virtual closure of the key Strait of Hormuz shipping lanes and a wild spike in crude. Brent touched almost $120 a barrel last night. WTI has gone from the low $60 US range to a hundred bucks in just days.

An oil crisis, if it lasts long enough, turns into an everything-crisis.

Inflation goes up because oil is used ubiquitously. Harvesting your morning blueberries. The plastic on those berries. The truck diesel that hauled the berry boxes. The airplane fuel that brought them from Mexico. The input costs at the blueberry farm, and at your grocery store.

Energy costs are a big hunk of the inflation index. And when the cost of living spikes, interest rates go up to contain them. Higher rates stifle borrowing, investing and economic growth. So job opportunities lessen – like in the 1970s – but this time with AI ready to eat a lot of those positions anyway.

And real estate? Oy. This Iran War just about guarantees the spring rutting season is kaput before it starts.

Equity markets aren’t happy either, of course. It’s been a wild ride since the first day of March, when the bombs started.

“As much as the term ‘stagflation’ has been wildly over-used in recent years, a true oil price shock would indeed increase the risks of stagflationary forces — higher inflation, weaker growth; not a market-friendly combination,” says BMO economist Doug Porter.

Tokyo economist Toru Nishihama agrees. “Many central banks will face a tough decision as they come under pressure from both markets and governments,” he told Reuters. “With no clear end in sight to the conflict, the risk of stagflation is heightening day by day.”

It’s all a matter of duration now. If the war and crazy oil prices hang on into the summer, economists see food inflation hitting 8% and the Bank of Canada rate hike odds shooting higher. That would mean one or two increases by the end of the year, and mortgages solidly above 4%. The melt in prices would continue. Unemployment – already near 8% in the GTA – could drift higher, and at the same time we’ll be into negotiations with the combative MAGA White House on extending our trade deal.

So, war + oil + inflation + unemployment + rate pop + irritating Americans = let’s not think about it.

The more likely outcome is Iran wins.

Seriously. Trump doesn’t have the staying power to craft a lengthy, casualty-heavy military campaign involving ground troops in the months leading up to the midterm elections. So the US and Israel may bomb the country back into the Middle Ages then walk away, saying mission accomplished. The shipping lanes will eventually reopen. Oil flow. Prices drop. Markets rally. And the lasting damage is another ruined country, with fanatics still in charge.

Conclusion: it’s getting easier to dislike America.

But we’ll survive.

About the picture: “We just raided our RRSPs to put a down payment on a house using the Home Buyers’ Plan,” write Mike and Annie, in Vancouver.  “We have RRSPs at both one of the big banks and a credit union. Upon reviewing the accounts, we were shocked to find out that not only was the credit union charging a $50 annual fee for the account on top of high MERs, there was also a $25 fee to withdraw for the HBP and a $175 fee to close out the account… because if we kept the account at $0 for five years until we start repaying, $50 would be charged each year on that zero balance. None of the flashy social media posts or web pages for these institutions mentions these fees… it’s all about “Make your RRSP go further!” with families laughing on a couch or intergenerational forest walks. So buyer beware is the lesson learned here. Always ask when you open an account: “what will it costs to get our money out and how long will it take? Anyway, here’s the pet photo tax. Merin is as shocked as we are at the hidden costs of buying a home!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2026/03/09/100-oil/