$4 gas is just the start of the price we'll pay for Iran | Opinion

In the two weeks following the outbreak of war Feb. 28, the benchmark price of crude oil rose 40%. Even if oil prices stop rising, we should see gasoline prices in the $4 to $4.25 range by early April.

That is the early economic cost of this war with Iran. It will not be the last.

We have made much progress against Iran's warmaking capacity. It has no effective air force and almost no air defense capacity or navy. Without an air force, Iran's army can conduct no meaningful attacks. The Israeli and U.S. air campaigns in the opening weeks of the war have killed more than 3,000 – many of them Islamic Revolutionary Guard Corps and government officials.

Thus far, the loss of life has been terrible, but far less than it could have been. That might change, and we should be unsurprised at the eventual cost of this war. I write that with tears of fear and sadness.

The end of the Iranian regime and its half-century of subsidizing terror would improve long-term growth prospects across the Middle East and save the United States billions of dollars a year in hunting terrorists. That would be a resounding achievement of arms and policy. Reasonable men and women know there are benefits and costs to war, and it is too often necessary.

But wars have costs beyond the battlefield. We will need to replace the weapons, ammunition and equipment destroyed in this war. Thus far, that is tractable – perhaps $25 billion. It seems certain to grow.

Iran's real weapon: Oil

The larger economic threat is oil. Iran can interdict, if not wholly stop, oil supply flows through the Strait of Hormuz. The world's economic exposure is heavily dependent upon the flow of roughly one-fifth of total oil production through those straits. Significant interruption of that supply will further raise the price of oil.

A longer supply shock will ensure that America is in recession – we might already be – and will push much of the rest of the world's economy into a downturn. A long supply shock, say six to 12 months, will almost certainly bring about a global recession, along with higher prices.

America's war aims are uncertain, as Trump administration officials have offered contradictory goals. Iran's goals are not difficult to discern. The regime seeks to stay in power and reduce any possible threat to itself in the years and decades to come.

As the Prussian military theorist Carl von Clausewitz observed, "War is the continuation of politics by other means."

Iran wins this war by making the United States stop fighting. It scores a durable victory by making a war against Iran so painful that no one attempts to do so again for a generation. The least costly and most effective way to accomplish this is simply to cut off oil shipments until we stop fighting and the world is thrown into economic disorder.

That strategy shifts our position from offensive to defensive operations – from setting the location and tempo of battle to reacting to Iran's decisions.

On March 26, President Donald Trump claimed that those leading Iran’s negotiations have allowed 10 “big boats of oil” through the Strait of Hormuz, a move he said proved that “we’re dealing with the right people.”

We shall see.

America must decide if Iranian regime change is worth it

We can still target the Iranian regime and attempt to weaken its ability to block oil shipments. We can support Iranian dissidents and further erode Iran’s ability to fire drones and ballistic missiles at our troops and allies. This work might bring about regime change.

We can hope for a different Iranian regime that is sympathetic to the Enlightenment ideals of individual sovereignty, freedom of speech and worship, and peace. As in the past, we would wish to help that country rebuild and restore its economy. Any long-term effort to ensure regime change will take an Iranian Marshall Plan. This won't be as popular as the original Marshall Plan that helped rebuild Europe, but it will be as critical to the long-term success of this war as our considerable military prowess.

If we don’t do it, China will.

In the long history of war, there are no examples of victory for an attacking army forced into fighting a defensive war and conceding the initiative. The Duke of Wellington, who defeated Napoleon at Waterloo, warned that "nothing except a battle lost can be half so melancholy as a battle won." This bodes ill for the global economy and for our prospects in this war.

I have never before wished more that I am wrong, or been more fearful that I am right.

Michael J. Hicks is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. This column originally appeared in the Indianapolis Star.