President Donald Trump’s plan to impose a toll on shipments through the Strait of Hormuz drew a cool response from some GOP lawmakers on Monday — and left others bewildered.
Trump said the waterway, which provides passage for 20 percent of the world’s oil and gas supplies, was open despite the ongoing hostilities between the U.S. and Iran, and he pledged to exact tolls amounting to 20 percent of the value of cargoes that pass through it to pay for securing the movement of goods.
The president’s escalation follows the collapse of a ceasefire with Iran that was supposed to — at least in the U.S. perspective — refrain from interfering in traffic though the strait. Instead, Iran continued trying to assert control.
Sen. John Kennedy (R-La.) expressed opposition to any fees for crossing the strait. “I think they’re international waters, and there shouldn’t be a toll put on ships by anyone,” said Kennedy, who has otherwise defended the administration’s Iran strategy.
Others sought to interpret Trump’s latest move as a fee for keeping the peace. Senate Armed Services Chair Roger Wicker (R-Miss.) didn’t think Trump was proposing a toll.
“If a country’s ships are providing safe passage and protection against military strikes, that’s a bit different than a toll,” said Wicker, who added that the issue “bears clearing up.”
Oil industry analysts said a fee, were it to be implemented, would cost consumers at the pump. The White House did not respond to a request for comment Monday on how the fee would work or how it could affect prices.
The divisions on Trump’s latest plan mirror the GOP’s split on Iran generally. Some Republicans were happy for the ceasefire to send oil prices down ahead of the midterms. Others wanted to keep fighting.
“I think it’s all a means to an end to get prices overall lower and more oil flowing through the Strait of Hormuz,” said Sen. Steve Daines (R-Mont.), a member of the Energy and Natural Resources Committee.
Senate Environment and Public Works Chair Shelley Moore Capito (R-W.Va.) said of the fee: “I think there have to be consequences for the fact that Iran won’t abide by agreements that they make and memorandums of understanding. So I’m fully supportive of the president on that.”
But gasoline prices remain “a big concern,” she said, adding that bringing the war to a close will be difficult “if you don’t have an honest broker on the other side.”
Sen. Alan Armstrong (R-Okla.), a former oil and gas CEO, refuted predictions that a 20 percent fee would have a hefty impact on American energy prices. It wouldn’t have “a very material impact” in the U.S., he said, though he acknowledged there would be global effects.
“People have been saying ‘Oh my gosh, that’s going to be a 20 percent increase on pricing.’ That’s not the way the math works,” Armstrong said.
Sen. John Hoeven (R-N.D.), another member of the Energy and Natural Resources Committee, said he would “reserve judgment” until hearing more details.
The U.S. benchmark crude price was trading at around $78 as of Monday evening — up by more than 9 percent — after Trump formally informed Congress the U.S. was once again at war with Iran.
And though gasoline prices had been falling quickly in the weeks prior to last month’s ceasefire announcement and had continued trending downward, the past few days have seen a reversal.
Prices at the pump were averaging about $3.87 nationwide as of late Monday, according to AAA, up about 8 cents from a week prior. And ClearView Energy Partners, a consulting firm, said a 20 percent Hormuz fee at current oil prices could drive gasoline costs up 37 cents a gallon.
Democrats were quick to seize on the impacts that renewed fighting in the Middle East could have on domestic gasoline prices. Speaking on the Senate floor Monday, Minority Leader Chuck Schumer (R-N.Y.) said that Trump’s latest moves in Iran were “a recipe for utter disaster.”
And Sen. Tim Kaine (D-Va.) said Trump’s proposed fee could draw out conflict and troop presence in the region even longer. Kaine has led numerous resolutions in the Senate to curtail the war.
“If we’re suddenly going to be the guardian of the strait, that’s not going to just be accepted lying down. That’s going to put more troops at risk and impose more damage on the American economy and raise the costs of this war,” Kaine said.
