For a long time I've been reading that the closure of Hormuz is going to constrain consumption soon. I understand the economic theory that reducing supply of an inelastic commodity greatly increases the price. The article says that inventories have insulated us from high prices so far. I am surprised by how large and effective those inventories have been. And I am surprised that futures prices are not higher. Can anyone here suggest explanations?

If, hypothetically, the war ended tomorrow, then we could resume Business As Usual and slowly start rebuilding reserves. The Powers That Be (governments, oil corporations, etc.) have a vested interest in this: while a price spike ostensibly makes money for the oil corporations, it also drives people to invest in green energy, buy electric cars, or make lifestyle changes that reduce long-term consumption. Meanwhile, the politicians benefit from the illusion that everything is under control.

There are still enough reserves to maintain this illusion AND do a fairly orderly "jack up prices, drive down demand" transition if and when it proves necessary.

TL;DR: The whole point of these reserves is to provide this sort of stability

It is almost entirely explained by China cutting imports significantly. They are running down their inventory waiting for prices to drop again. Consumption was previously constrainted in much of Asia, for example 4 day work weeks etc. The US has also lowered their strategic petroleum reserve to new lows.

Meanwhile, the gas prices near me recently decreased.

This must be how Cassandra felt all the time.

Like the runup to COVID, everyone is just shambling along pretending that nothing’s happening. Even if the strait is opened tomorrow, inventories will continue to fall for some time. This is going to be a serious crisis.

I am really not looking forward to whatever bullshit laws they try to force through during the crisis.

And just like Covid, where I recall almost everyone on HN believed it'd be the end of the world, the world will adjust and will get through this just fine.

Your recollection is incorrect, and besides that, Covid had a serious impact on the world that's still being felt today. We didn't simply "get through it just fine."

“Getting through” a crisis is almost guaranteed short of a planet killing asteroid. We also “got through” WWII, although it was an extremely unpleasant time.

Covid (and the response to it) caused the deepest global recession since the Great Depression. It was a big deal, very damaging to the global economy, and generally a miserable time for most.

No one is claiming the end of the world here. Just $150 to $200 per barrel of oil.

> ... like Covid, where I recall almost everyone on HN believed it'd be the end of the world ...

Looking back, but don't see that. Maybe I'm just failing to hit Peak Doomer?

For example - https://news.ycombinator.com/front?day=2020-06-09

It was absolutely the end of the world for many folks not as privileged by sheer chance of birth place. And getting through this "just fine" will mean hundreds of thousands of starvations in addition to the "default rate" of ~10k just children dying of malnutration each day. So yeah, congratulations to your luck that you can just shrug it off as insignificant for you personally..

It will hold until midterms then hit the moon.