Why ending the war won't heal the economy

**SPEAKER_1** (0:00)
Support for Here and Now Anytime comes from MathWorks, creator of MATLAB and Simulink software, to design and develop engineered systems, accelerating the pace of discovery in engineering and science. Learn more at mathworks.com.

**SPEAKER_2** (0:16)
WBUR podcasts, Boston.

**Ali Velshi** (0:21)
We have now seen things that we've never seen happen before. This is bigger than the 70s energy crisis. Gas prices might go down a bit.
It will be a while before they go down a lot.

**Chris Bentley** (0:33)
Even if the war is over, and that's very much an if, the global economic turmoil is not.
It's Thursday, June 18th, and this is Here and Now Anytime from NPR and WBUR. I'm Chris Bentley. Today on the show, Senate Democrats say the president's new acting director of national intelligence is only being picked for the job because he's loyal to Trump.

**Mark Warner** (1:09)
And my fear is that Mr. Pulte could fabricate a piece of intelligence or take a single piece of intelligence used as an excuse for interference in our elections this year.

**Chris Bentley** (1:18)
We'll also hear from some voters in Wisconsin about the agreement to end America's war on Iran.

**SPEAKER_6** (1:24)
We essentially got nothing out of it. It's hurt our economy and it's accomplished the square root of nothing.

**Chris Bentley** (1:29)
Also, New Yorkers celebrate their NBA champions, the Knicks.

**Roy Donk** (1:35)
Oh, the mood is like pure joy. I've never seen anything like it.

**Chris Bentley** (1:40)
But first, pure joy might be a bit much to describe the mood in France, where President Trump signed a preliminary agreement to end the American war against Iran.
But there is certainly an air of relief for many. Iran has also signed the Memorandum of Understanding, which reopens the Strait of Hormuz and kicks off a period of negotiation between the two countries. We wanted to zoom in on what the potential end of this war means for the global economy and your wallet. Today, the average price of a gallon of regular unleaded gasoline in the US fell below four bucks for the first time in months. But what would the end of the war mean for the economy more broadly? Ms Now's Ali Velshi told David Folkenflick, it's going to take a while for the global economy to recover, if the deal even holds.

**Ali Velshi** (2:31)
First of all, it's Israel and America's war. Israel's not part of this Memorandum of Understanding. They didn't sign it. They claim they hadn't even seen it.
And part of the condition of this deal is that Israel and Hezbollah stopped fighting. They're not part of this. So it's not clear that this deal even lasts the 60 days they're supposed to discuss it. The problem with energy prices is that there was always extra oil floating around the world. We've used up a lot of that oil since this war began. So even if the Strait of Hormuz opens up and things start floating through, it could be up to a year before we're in the position we were in before the war started. So they say with oil prices, they go up like a rocket and they come down like a feather.
I'm not sure. We're still more than a dollar more than higher than we were before this war started.

**David Folkenflick** (3:17)
So as you say, this memorandum of understanding could go up in flames. But let's pretend as though this is a done deal and it settles so that we understand the potential implications. Gas prices are down. You say they're unlikely to return to pre-war levels.
Obviously, the price of gas affects cost of fertilizer and flights and other goods too. What would need to happen in order for that feather-like descent to accelerate a bit and for oil and gas prices to come down?

**Ali Velshi** (3:45)
We'd have to get to full pre-conflict energy flow through the Strait of Hormuz. That's not going to happen until 2027, assuming this agreement holds. Part of that is because energy facilities have been destroyed.
Iran has actually attacked a lot of energy facilities. The US have attacked energy facilities on Karg Island, which is Iran's main center. So they've got to be rebuilt. Some of that's going to take years, particularly in Qatar where natural gas facilities were destroyed. So that's got to happen. And producers of oil and natural gas may be reluctant to even restart the repairs and the production until they're convinced that this deal will actually become a deal and it'll hold. So we may be 60 days away from anybody even starting to do the kinds of things. It's not just a matter of the oil going through the Strait of Hormuz. It's all the oil that's being produced inside the Persian Gulf that we're not sure is going to get restarted all that quickly.