Someone asked me yesterday why rising oil prices are such a big deal.

It immediately reminded me of a scene from Landman where he walks through just how many things oil is an input to.

Oil isn’t just gasoline.

It’s transportation, plastics, fertilizer, manufacturing, packaging, chemicals… the list goes on.

When the price of a core input like oil spikes, the cost of producing almost everything goes up.

Eventually that leads to demand destruction — prices get high enough that people simply stop buying.

And demand destruction is one of the fastest ways to tip an economy into recession.

There are stabilizers that help moderate oil shocks:

• Strategic petroleum reserves

• Increased production

• Demand adjustments

But one of the most immediate solutions right now would be de-escalation of the geopolitical tensions threatening shipping routes, particularly ensuring safe passage for tankers through the Strait of Hormuz.