Beef is up 5.5% this year. Sugar and sweets are up 6.7%. Coffee prices are climbing fast enough that your morning cup costs noticeably more than it did in January. The USDA projects food prices will rise 3.1% in 2026. Gas just hit $3.70 a gallon, up from roughly $3 before the Iran strikes.

Everyone is watching oil. They should be watching fertilizer. "Drill baby drill" was the right call on energy, and it's the reason America isn't reliving the 1970s. Now apply the same supply-side logic to the next link in the chain, because the Federal Reserve can't fix a broken supply line with rate cuts.

The chain nobody talks about

Oil gets the headlines because it moves fast and shows up at every gas station in the country. Brent crude surged 35% in a single week after the Iran strikes began, the largest weekly gain in futures trading history dating to 1983. That is dramatic. But the quieter shock will last longer.

Forty-three percent of the world's seaborne urea exports transit the Strait of Hormuz. Thirty percent of global ammonia shipments pass through the same chokepoint. The strait has been effectively closed since February 28. Urea prices have spiked roughly 35% since the war started.

Most Americans don't think about fertilizer. They should. Natural gas is the primary feedstock for ammonia, which becomes nitrogen fertilizer, which goes on crops, which become food. When Hormuz closes, the gas-to-fertilizer-to-food chain breaks. Farmers are already rethinking spring planting because input costs are surging right when they need to buy. Planting season doesn't wait for diplomacy.

We saw this before. In 2022, Russia's fertilizer export restrictions after the Ukraine invasion sent the Bloomberg fertilizer index to an all-time high. European fertilizer plants shut down because natural gas made production uneconomical. Food prices followed within months. The mechanism was identical: geopolitical shock hits energy, energy hits fertilizer, fertilizer hits food, food hits CPI. We talked about supply chain resilience. We didn't build it. And now the same pipe is breaking in a different place.

Beijing feels it too

China produces about 75% of its own fertilizer, including a record 76.5 million tons of urea this year. But China's food vulnerability runs through Brazil. Brazil supplies 73.6% of China's soybean imports, and those soybeans feed the livestock that feed 1.4 billion people. Brazil depends heavily on Middle Eastern urea. Brazil's Agriculture Ministry just classified its fertilizer outlook as "extremely high risk" for the 2026-27 harvest, warning that the Iran war and Chinese export curbs are converging at the worst possible moment.

China also imports millions of metric tons of sulfur from the Gulf each year for phosphate production. A country that can't reliably feed its population has a regime stability problem, not just an economic one. That's a pressure point for Washington, if Washington understands the full picture beyond oil prices.

What we got right

The United States is not reliving the 1973 Arab oil embargo. There is one reason: domestic production. America is the world's largest natural gas producer and a net energy exporter. "Drill baby drill" was the correct supply-side instinct on oil. When Brent hit $119 a barrel on March 9, the American economy absorbed the blow. In the 1970s, a spike like that would have triggered gas lines and a recession within weeks.

But the administration hasn't applied the same logic to the next link in the chain. The United States is the one of the top largest ammonia producer in the world, tied with Russia, behind only China. American fertilizer companies already have a cost advantage because domestic natural gas is cheap and abundant. U.S. ammonia plants are operating at roughly 80% of rated capacity, with room to ramp up. Capacity is set to increase 11% over the next five years.

The infrastructure exists. The feedstock exists. The policy push to accelerate domestic fertilizer production doesn't. "Drill baby drill" for fertilizer means expanding ammonia capacity, fast-tracking permits for new plants, and reducing American agriculture's exposure to foreign chokepoints. The model that worked for oil works here too.

Rate cuts won't fix this

The Federal Open Market Committee meets Monday and Tuesday. The December dot plot projected a median fed funds rate of 3.4% by year-end, which means just 25 basis points of cuts from the current range of 3.50-3.75%. Four FOMC members projected zero cuts for the entire year. Boston Fed President Susan Collins and Richmond Fed President Thomas Barkin have both warned publicly that inflation is too high to cut.

The White House disagrees. Trump posted on Truth Social demanding the Fed cut rates "IMMEDIATELY" ahead of the March meeting. The pressure is real. But the dot plots point in the opposite direction, and the data supports the dots.

February CPI came in at 2.4%, sticky and above target. Payrolls fell 92,000 in February. December was revised down to negative 17,000. Two of the last three months have shown job losses. And the fertilizer shock hasn't hit grocery shelves yet. That lag runs three to six months.

So the Fed is stuck. Cutting rates into a supply-side inflation shock is the wrong tool — rate cuts stimulate demand, and demand isn't the problem. The AI trade alone is pouring trillions into the economy. Data center construction workers are earning 25-30% premiums, and the construction industry is short 439,000 workers. The economy is running too hot for a natural correction, which means the inflationary pressure from the supply side has nowhere to go.

A Fed that doesn't know what to do will do nothing. And doing nothing is the right call. The last time America faced supply-driven inflation with no easy exit was the 1970s. That crisis didn't break because the Fed acted alone. It broke because Volcker's rate discipline was paired with Reagan's supply-side expansion: deregulation, domestic energy production, capital investment incentives. Rates crushed the demand-side inflation. Supply-side policies expanded capacity. They worked together. One without the other fails.

The grocery receipt test

The playbook exists. Hold rates. Expand the supply side. Apply to fertilizer what "drill baby drill" already applied to oil. The Fed can buy time, but only if domestic production actually grows to meet the moment.

Your grocery bill isn't a mystery. It's a map. Every price increase traces back through a chain that starts with energy, runs through fertilizer, and ends on your kitchen table. We fixed the first link. The rest of the chain is still exposed to the same foreign chokepoints that broke it in 2022. Until that changes, the inflation we thought we beat is just waiting for the next crisis to come back.