I have a constructive outside-the-box modest proposal, in light of all the recent hand wringing about how to open the Strait of Hormuz, the recent Economist cover, and the latest 60 Minutes story about the difficulties that the U.S. faces in opening the Strait.
Is it time for a TARP-style government financial engineering, 2026 style?
TARP, With a Difference
Here is the problem as I see it. A lot of oil tankers are trapped in the Gulf and afraid to transit the Strait of Hormuz. President Trump, in frustration, called for tanker captains and crews “to show some guts”.
If that’s the problem, why doesn’t the U.S. Treasury take the risk? There is an enormous supply-demand imbalance in the physical commodity inside the Gulf. Supposing the U.S. Treasury announces a bid to buy the tanker and oil in the Gulf inside the Strait at (say) $70 a barrel. It simultaneously announces an offer to sell the tanker and its cargo for deliver outside the Strait at the world price.
Surely the U.S. Navy or Merchant Marines have enough staff to take over the tanker and sail it the short distance. The U.S. military should have sufficient resources to escort and suppress fire along the shore during those transits. Sure, there will be losses, but that accounts for the premium between inside and outside the Strait. The notion might appeal to Trump’s profit motive.
The proposal is reminiscent of the George C. Scott line in this clip of Dr. Strangelove, “Mr. President, I’m not saying we don’t get our hair mussed, but…”