American Thinker

by Timothy Birdnow

    A big part of the increase in oil prices at the current moment stems from a huge spike in insurance costs for tankers.

    That cost is being driven by Iran's attacks on the tankers that navigate the Strait of Hormuz, and the obvious need to guarantee that these tankers are insured against any damage they may take as a result of Iranian drones or rockets. In fact, this is causing a massive realignment in the world economy, a realigment that benefits America because we have a sharp businessman in office who understands how to make money off a bad situation.

    Most tanker insurance was run by Lloyds of London and a few other British firms, or was until now:

    For over 300 years, Lloyd’s of London has underwritten maritime insurance for the tankers and cargo ships that carry the world’s oil, gas, and goods. Its dominance over the Strait of Hormuz -- the narrow chokepoint through which approximately 30% of the world’s seaborne oil supply passes -- represented one of the most quietly powerful financial monopolies in history. Control the insurance, and you control who can sail. Control who can sail, and you control the flow of energy that powers the global economy.

[...]

    Within 48 hours of Lloyd’s withdrawal, two things happened simultaneously. The US Navy, operating through US Naval Forces Central Command, expanded its escort operations across the Gulf -- effectively offering the physical protection that insurance underwrites. And American insurers began moving to replace Lloyd’s coverage entirely, stepping into a market that British financial infrastructure had monopolised since the reign of William III.

    The Crown’s 300-year chokehold on global energy insurance was severed -- not by war, not by sanctions, but by filling a vacuum created by an institution that blinked at the wrong moment.

    The geopolitical message was unmistakable. America now controls both the physical escort corridor through the world’s most critical oil shipping lane and the financial infrastructure that makes commercial shipping through it possible. The strategic and economic stakes of the Middle East conflict have just acquired an entirely new dimension that most market analysts are not yet fully pricing.

    Now America is running the insurance business and now, sadly, prices are very high but that's unavoidable as the U.S. has to provide defense for the tankers. It will come down when Iran crumbles and things get back to normal.

    America is taking control of energy worldwide (something the Russians tried to do but failed) and energy is the lifeblood of our civilization. The Chinese will have to be very polite to us in future. He who controls shipping rules the world.

    But right now, insurance costs are adding to the cost of oil and are part of the problem we face here at home. If oil prices drop, we will win next month's elections. We need oil prices at three bucks a gallon or less; if we get that big a drop we'll win, if not, it's a toss-up.

    American insurers are getting rich off this. They include Travelers, Berkshire Hathaway, AIG, Liberty Mutual, The Hartford, among others. This is money that is coming home to America, not stuffing the pockets of the British nobility.

    The U.S. government is guaranteeing this insurance, partnering with American insurance companies. While this may look like price gouging, it is in fact quite reasonable to raise prices when the risks are so high, but it's certainly killing the shippers and driving up prices. That has to change.

    But that should be temporary and should only last as long as the military has to back them up. It's expensive to run any cargo through a war zone.

    Any way you look at it, this is what MAGA means. America now controls all oil shipping to a greater or lesser degree. We are the Kahuna of energy now. We can speed up the flow or slow it down or stop it entirely if we choose.

    In the Book of Genesis 22: 17 God promises Abraham:

    "And your offspring shall possess the gate of his enemies.”

    This is exactly what the Bible meant. Control the passageways, control the gates of your enemies, and you rule the world. By ensuring the free flow of trade, we essentially control the gates of our enemies -- and friends. This is why Britain ruled the world, and it was in no small part because it insured shipping and protected it with the Royal Navy. Men in business suits gave Britain power as much, if not more, than did their military.

    Pax Americana is back, and better than ever -- if we can keep it.

    Hat tip to Mike.

Tim blogs at www.tbirdnow.mee.nu