From Hormuz to Spokane: The Oil Shock Moving Through Washington’s Retirement System
Eastern Washington is paying the price for Trump's war of choice, at the pump, on the farm, and in the retirement accounts of 57,000 public workers.
Photo: Spokesman-Review
The United States is waging a war with Iran, and the assessment by Washington’s CD-5 Congressman Michael Baumgartner is that “ … the war in Iran is going well”.1
In Spokane, drivers are paying about $4.85 to $4.90 per gallon for unleaded gasoline, up more than a dollar in roughly three weeks.2 Patrick De Haan, an analyst with GasPrices.com, said, “Waging wars like this does push the price up.”3
In Eastern Washington’s wheat sector, fuel costs are rising during planting season. “With the economy of farming in Washington State, we’re ranked last on profitability in the United States right now,” said Gil Crosby, a wheat farmer in the region.5 Desmond Lachman, a senior fellow at the American Enterprise Institute and former deputy director in the IMF’s Policy Development and Review Department, wrote that Trump’s “war of choice against Iran is bound to weaken public finances and the broader economy further.”6
Trump’s war has already hit financial markets. Stocks are falling, bond yields are rising, and inflation expectations are climbing as oil prices surge. Those market shifts are threatening the retirement security of Eastern Washington workers.
The Oil Shock Driving the Crisis
The war in the Middle East has produced the largest supply disruption in the history of the global oil market, according to the International Energy Agency.7 Without a rapid resumption of shipping, the IEA said supply losses are set to increase.8 The Strait of Hormuz carries roughly 20 percent of the world’s petroleum supply.9 Flows through it have fallen to a trickle. Gulf producers have cut output by at least 10 million barrels per day.10
The Strait also carries approximately one-third of global seaborne fertilizer trade.13 Benchmark nitrogen fertilizer costs at U.S. ports have risen nearly 30 percent since the war began,14 and Eastern Washington wheat farmers, who sell into export markets, cannot pass those increases to buyers.15
The scale of the disruption has renewed scrutiny of the decisions that preceded the conflict. Richard Haass, a former director of policy planning at the State Department, characterized the conflict as a “war of choice rather than necessity,”16 arguing that diplomacy remained available as an alternative. “There was no Plan B,” wrote Tom Nichols, a professor emeritus at the U.S. Naval War College.17
Why Rising Oil Prices Pull Markets Down
When oil prices spike, energy companies and their investors collect higher profits. Those same price increases raise the cost of fuel, groceries, and nearly everything else Americans buy. They also reduce the value of stocks and pension portfolios that most workers depend on. Higher oil prices raise production and transportation costs for companies that use oil and its by-products. That reduces profits and expected cash flow, according to a U.S. Energy Information Administration working paper.18 Firms in the energy sector experience the opposite effect, with higher prices increasing margins and expected returns.19
Oil price increases raise the cost of goods across the economy and drive inflation higher. When that happens, the Federal Reserve typically responds by raising interest rates.20 Higher interest rates make borrowing more expensive, reduce investment, and lower stock prices. For a pension fund required to earn 7.25 percent annually, falling stock prices make that target harder to reach. President Trump has publicly pressed Federal Reserve Chairman Jerome Powell to cut rates even as oil-driven inflation climbs, writing in January 2026 that Powell “should cut interest rates, MEANINGFULLY!!!”22 Rate cuts during rising inflation would likely accelerate the damage, not reverse it. The cost would fall on the same workers and retirees whose pension funds are already under pressure from falling markets.
Energy’s share of the S&P 500 has declined from 16 percent in 2008 to 3.5 percent, according to Commonfund.23 When energy made up a larger share of the market, rising oil prices produced gains that partly offset losses in other investments. At 3.5 percent, the gains from rising oil prices are too small to offset the losses hitting the other 96.5 percent of the portfolio.
Where Washington’s Retirement Money Is Invested
The Washington State Investment Board manages $230.5 billion in assets supporting the state’s public retirement systems, including the Teachers Retirement System and the Public Employees Retirement System.24 The portfolio tracks broad market indexes through its stock holdings. That means the market decline caused by the oil shock directly affects those investments. The portfolio also includes direct investments in energy. When energy markets fall, those investments lose value.25
Washington’s public pension systems must meet an annual return target to keep promised benefits fully funded. As of the most recent measurement, they were meeting that obligation,28’29 but that measurement was taken before the current market disruption began.
Private equity values usually lag behind public market declines by two to three quarters before losses show up in reported values, according to the International Organization of Securities Commissions, meaning losses occurring in early 2026 may not be visible in reported valuations until late 2026 at the earliest.30
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Who Is Affected in Eastern Washington
Of the more than 590,000 active members and retirees in Washington’s public pension system, an estimated 34,860 active members and 22,168 retirees are located in the 5th Congressional District, according to the Office of the State Actuary.31 These figures are estimates based on population share. Among them are teachers covered by the Teachers Retirement System and public employees covered by the Public Employees Retirement System.
For retirees collecting benefits today and workers still contributing, hundreds of millions of dollars are tied to a portfolio33 exposed to the outcome of Trump’s war.
Separate from the state system, union retirement plans operate through independent multi-employer trusts. Teamsters Local 690 represents more than 3,600 workers in Eastern Washington and Northern Idaho34 whose retirement benefits are provided through the Western Conference of Teamsters Pension Trust, a nationally administered multi-employer plan.35 UFCW 3000 represents workers across the region with pension benefits provided through the UFCW Consolidated Pension Plan, also a nationally administered multi-employer trust.37 IBEW electricians in Eastern Washington are covered through the 112/73 Retirement Plan serving Local 112 and Local 73 members.38
What Happened Last Time Oil Spiked
During the 1973 to 1974 oil shock, the S&P 500 declined 14.31 percent in 1973 and 25.90 percent in 1974, according to data compiled by NYU Stern School of Business.39 In 1974, none of the 87,000 public employees in the Oregon Public Employees Retirement System earned any return on their accounts because of stock market losses.40
Franklin Templeton and ClearBridge Investments identified 1973, 1979, and 1990 as among the worst market environments following military escalations.41
Washington’s teachers, public employees, and union workers are at the start of a disruption the International Energy Agency has described as larger than any oil shock in recorded history.42
What It Means for Eastern Washington Workers and Retirees Now
In Washington’s 5th Congressional District, about $653 million in annual pension benefits paid to teachers, public employees, and workers represented by Teamsters, UFCW, and IBEW unions depend on the performance of a $230.5 billion portfolio exposed to the same market disruptions already moving through global oil markets. Jon Hoffman, a policy analyst at the Cato Institute, wrote that tactical successes in the conflict “cannot mask what has quickly become another strategic failure in the Middle East.”43
CD-5 Congressman Michael Baumgartner, referring to the Strait of Hormuz, described the impact in political terms. “I think that that’s a significant problem for the US in the short term as a political cycle program, really, how does the global economy impact the American political cycle that we deal with here?” he said in a March 27, 2026 recorded interview at the Hudson Institute. He focused on how global disruption affects domestic politics. He then downplayed the financial impact on the United States and, by extension, his own district, arguing that other countries would bear the greater economic cost.
“But in the medium term, there are so many other global actors that have far more at stake in the Straits of Hormuz than we do. I mean, it matters far more to the Europeans than it does to us. It matters far more to the Japanese and the Chinese than it does to us.”44
For Baumgartner, the Strait of Hormuz is a political cycle problem. For his constituents, it is a retirement problem, a fuel bill, and a farm that may not survive the planting season.
Endnotes
1. KHQ-TV. “The war in Iran is going well: Rep. Baumgartner discusses military action in the Middle East.” https://www.khq.com/news/the-war-in-iran-is-going-well-rep-baumgartner-discusses-military-action-in-the-middle/article_af268d02-abbf-47fe-9003-138dda1b1126.html
2. Spokesman-Review. “Sort of a kick in the teeth: Gas prices soar in Washington and Idaho amid Iran war.” March 23, 2026. https://www.spokesman.com/stories/2026/mar/23/sort-of-a-kick-in-the-teeth-gas-prices-soar-in-was/
3. Spokesman-Review. “Sort of a kick in the teeth: Gas prices soar in Washington and Idaho amid Iran war.” March 23, 2026. https://www.spokesman.com/stories/2026/mar/23/sort-of-a-kick-in-the-teeth-gas-prices-soar-in-was/
4. AAA. Gas Prices. Accessed March 30, 2026. https://gasprices.aaa.com/
5. KXLY 920. “Rising gas and fertilizer prices affecting local farmers.” March 20, 2026. https://kxly920.com/2026/03/20/rising-gas-and-fertilizer-prices-affecting-local-farmers/
6. Desmond Lachman, “Can the US Afford Trump’s Iran War?” Project Syndicate, March 9, 2026. https://www.project-syndicate.org/commentary/us-iran-war-could-invite-bond-vigilantes-by-desmond-lachman-2026-03; see also https://www.aei.org/profile/desmond-lachman/
7. International Energy Agency. Oil Market Report - March 2026. March 12, 2026. https://www.iea.org/reports/oil-market-report-march-2026
8. International Energy Agency. Oil Market Report - March 2026. March 12, 2026. https://www.iea.org/reports/oil-market-report-march-2026
9. U.S. Energy Information Administration. World Oil Transit Chokepoints. https://www.eia.gov/international/analysis/special-topics/World_Oil_Transit_Chokepoints
10. International Energy Agency. Oil Market Report - March 2026. March 12, 2026. https://www.iea.org/reports/oil-market-report-march-2026
11. International Energy Agency. Oil Market Report - March 2026. March 12, 2026. https://www.iea.org/reports/oil-market-report-march-2026
12. U.S. Energy Information Administration. “Amid regional conflict, the Strait of Hormuz remains critical oil chokepoint.” June 16, 2025. https://www.eia.gov/todayinenergy/detail.php?id=65504
13. CNBC. “It’s not just oil and gas. The Strait of Hormuz blockage is rattling another vital commodity.” March 25, 2026. https://www.cnbc.com/2026/03/25/fertilizer-price-iran-war-food-security-inflation-urea-potash-nitrogen-farmers.html
14. Fortune. “Soaring fertilizer prices could pressure a U.S. agricultural industry that supports 50 million jobs and over $10 trillion in output.” March 24, 2026. https://fortune.com/2026/03/24/iran-war-fertilizer-prices-us-farmers-agriculture/
15. KXLY 920. “Rising gas and fertilizer prices affecting local farmers.” March 20, 2026. https://kxly920.com/2026/03/20/rising-gas-and-fertilizer-prices-affecting-local-farmers/
16. Richard Haass, “Trump’s Risky War of Choice in Iran,” Financial Times, March 7, 2026, https://www.ft.com/content/8d3c9e4b-iran-war-of-choice-haass-2026.
17. Nichols, Tom. “Trump Had No Plan B for Iran.” The Atlantic. March 20, 2026. https://www.theatlantic.com/ideas/2026/03/trump-iran-war/686470/
18. Degiannakis, Stavros, George Filis, and Vipin Arora. “Oil Prices and Stock Markets.” U.S. Energy Information Administration. June 2017. https://www.eia.gov/workingpapers/pdf/oil_prices_stockmarkets.pdf
19. Degiannakis, Stavros, George Filis, and Vipin Arora. “Oil Prices and Stock Markets.” U.S. Energy Information Administration. June 2017. https://www.eia.gov/workingpapers/pdf/oil_prices_stockmarkets.pdf
20. Miyamoto, Wataru, Thuy Lan Nguyen, and Dmitriy Sergeyev. “How Oil Shocks Propagate: Evidence on the Monetary Policy Channel.” Federal Reserve Bank of San Francisco Working Paper 2024-07. 2024. https://www.frbsf.org/wp-content/uploads/wp2024-07.pdf
21. Smolyansky, Michael. “End of an Era: The Coming Long-Run Slowdown in Corporate Profit Growth and Stock Returns.” Finance and Economics Discussion Series 2023-041. Board of Governors of the Federal Reserve System. June 2023. https://www.federalreserve.gov/econres/feds/files/2023041pap.pdf
22. Fox Business. “Trump calls on Powell to lower interest rates after latest inflation data.” January 13, 2026. https://www.foxbusiness.com/politics/trump-calls-jerk-powell-lower-interest-rates-after-latest-inflation-data
23. Commonfund. “The Iran War and the Gulf Energy Crisis.” March 13, 2026. https://www.commonfund.org/cf-private-equity/the-iran-war-and-the-gulf-energy-crisis
24. Washington State Investment Board. Quarterly Report - September 30, 2025. https://www.sib.wa.gov/docs/reports/quarterly/qr093025.pdf
25. Washington State Investment Board. Quarterly Report - September 30, 2025. https://www.sib.wa.gov/docs/reports/quarterly/qr093025.pdf
26. Washington State Investment Board. Quarterly Report - June 30, 2025. https://www.sib.wa.gov/docs/reports/quarterly/qr063025.pdf
27. Washington State Investment Board. 2024 Sustainability Report. https://sib.wa.gov/docs/reports/sustainability/2024.pdf
28. Office of the State Actuary, Washington State Legislature. 2024 Actuarial Valuation Report - Summary of Key Results. August 2025. https://leg.wa.gov/media/n0tpllbw/i-summary-of-key-results.pdf
29. Office of the State Actuary, Washington State Legislature. 2024 Actuarial Valuation Report - Summary of Key Results. August 2025. https://leg.wa.gov/media/n0tpllbw/i-summary-of-key-results.pdf
30. International Organization of Securities Commissions. “Thematic Analysis: Emerging Risks in Private Finance” (FR10/23). September 23, 2023. https://www.iosco.org/library/pubdocs/pdf/IOSCOPD745.pdf
31. Washington’s 5th Congressional District. Grokipedia, sourcing OFM Growth Management Act projections. January 2026. https://grokipedia.com/page/Washington’s_5th_congressional_district; Washington State Office of Financial Management. OFM 2025 Population Trends. November 2025. https://ofm.wa.gov/wp-content/uploads/sites/default/files/public/dataresearch/pop/april1/ofm_april1_poptrends.pdf
33. Washington State Department of Retirement Systems. Annual Comprehensive Financial Report 2025. October 23, 2025. https://www.drs.wa.gov/wp-content/uploads/2025/10/2025-ACFR-Document-102325.pdf
34. Teamsters Local 690. https://www.teamsterslocal690.org/
35. Western Conference of Teamsters Pension Trust. https://wctpension.org/welcome
36. UFCW 3000. https://ufcw3000.org/
37. UFCW Employers Benefit Plan. UFCW Consolidated Pension Fund. https://ufcwemprfund.org/isite456/eremit.dll/45601/ufcw-consolidated-pension-fund
38. 112/73 Retirement Plan NECA-IBEW. Summary Plan Description. January 2021. https://ibewlu112.com/LU%20112%20_%2073%20Retirement%20Plan/112%20-73%20Retirement%20Plan%20Summary%20Plan%20Description%20%202021.pdf
39. Damodaran, Aswath. “Historical Returns on Stocks, Bonds and Bills: 1928-2024.” NYU Stern School of Business. Page updated January 5, 2026. https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
40. Oregon Public Employees Retirement System. Oregon PERS History. July 1, 2021. https://www.oregon.gov/pers/Documents/General-Information/PERS-History.pdf
41. Schulze, Jeffrey, and Josh Jamner. “AOR Update: Buy the Geopolitical Dip?” Franklin Templeton / ClearBridge Investments. March 6, 2026. https://www.franklintempleton.com/articles/2026/equity/aor-update-buy-the-geopolitical-dip
42. International Energy Agency. Oil Market Report - March 2026. March 12, 2026. https://www.iea.org/reports/oil-market-report-march-2026
43. Hoffman, Jon. “A Strategic Failure in Iran.” Cato at Liberty. Cato Institute. March 20, 2026. https://www.cato.org/blog/strategic-failure-iran
44. Baumgartner, Michael. “Congressman Michael Baumgartner on Operation Epic Fury and US Strategy.” Hudson Institute. March 27, 2026. https://www.hudson.org/events/congressman-michael-baumgartner-operation-epic-fury-us-strategy
45. Associated Press. “International Energy Agency head says global economy faces ‘major, major threat’ from Iran war.” March 23, 2026. https://apnews.com/article/f1e7ccd313263fd63e695f43a2e68165
46. Reuters. “ADNOC CEO calls any Iran curbs on Hormuz passage ‘economic terrorism.’” March 26, 2026. https://www.reuters.com/world/middle-east/adnoc-ceo-calls-any-iran-curbs-hormuz-passage-economic-terrorism-2026-03-26/
Capitalist imperialism — particularly under its leading proponent, its most brutal practitioner, and its bloody global enforcer, the U.S. — is a high stakes casino where those with chips to play have few options but to put them at risk. In a real democracy, the people could choose a different system. In the US the so-called “democracy” is in reality a brutal two-party ruling class consensus on capitalist imperialism which maintains imperialism to ensure capitalism and the interests of its elites. Whether it is this crisis as it affects the ruling class or any of those to come, or whether it is the perpetual crises faced by working class people (including current and retired state employees, of which I am one), neither ruling class party offers a solution. Capitalism must eat and imperialism must feed and protect it. The answer is not in Republicans vs Democrats, the two ruling class owned political machines which run the country as a two-party dictatorship. The answer is, as Rosa Luxemburg said, “Socialism of barbarism”. Workers of the world unite! Educate, organize, mobilize and fight for the world we want, one not subject to the casino games and war scenarios of the bosses and the politicians.