The details are still unclear, but according to The Hill citing the Financial Times, the Iranian Republic will levy $1 per barrel of oil to be paid in bitcoin on all traffic out of the Persian Gulf.

The Iranian government obviously benefits from this, but who actually pays the toll? This question, what is known as tax incidence, is one important point of difference between the Austrian school and mainstream economics that remains widely overlooked, and the Hormuz toll is a good opportunity to highlight this difference and the Austrian, especially Rothbardian, approach to tax incidence. It is also an interesting political and economic question in its own right.

Toll Economics

The Hormuz toll imposed by the Iranians is paid immediately by the owners of the ships and cargoes of oil passing through. By the time of the ceasefire, there were about 2,000 vessels stuck in the Persian Gulf, but by no means all were oil tankers. For these cargoes, there can be no question of shifting the incidence of the toll. It is simply a total loss to them. However, now that the toll is established, it becomes effectively a calculable cost to the shippers of oil. Then the question emerges: can the businessmen who immediately pay the toll shift it to someone else and make them bear its burden? Here the laws of economics come into play. According to Rothbard's first law of incidence, "no tax can be shifted forward." That is, the person or company paying the tax cannot make the buyer of his product, and ultimately the final consumer bear its burden by raising his price. The price is set by demand and supply, and demand does not shift simply because a tax is imposed. In the short run, the stock in existence of the good is the relevant supply and the owner is willing to sell at any price. As we learn from total demand and stock analysis, only if the owner of the good exercises reservation demand, that is, if he has some alternative use for the good or if he speculates that the price (or in this particular case, the toll) might change to his benefit, will this not be the case In the case of a producer good like oil on board tankers, there are few alternative uses and little room for speculation, as not only the oil but also the tanker is immobilised so long as it cannot leave the Persian Gulf. Hence, in the short term, as we said, the companies who directly pay the toll will also bear the full burden.

In the long run, however, things look different and the incidence of the toll shifts. The shippers who directly pay the toll can shift the incidence backwards, specifically onto the producers of the oil. The price of oil at the well will permanently be below the world market price by the amount of the toll and the capital value of the oil well will be proportionately lower. The other producer goods in question will not be affected, since they can shift to alternative uses. Labourers can go elsewhere for a job and capitalists can invest in something else. Thus, even capital goods completely specific to Arabian oil wells (for instance, oil drills in situ), will not, in the long run, change in value. The oil well is the original factor completely specific to oil production, and so the incidence of the Hormuz toll will fall completely on the owners of the oil wells. Writes Rothbard, "[t]he excise tax is also a tax on incomes… [and] the impact falls most heavily on the factors specific to the taxed industry."