Trump’s Coronavirus Plan: Raise Gas Prices
Donald Trump’s economic ignorance and admiration of tyrants will lead to higher prices at the gas pump, punishing essential workers who drive to their jobs. He’s even willing to promise reductions in American oil production in the process.
As the lone Democrat on Bearing Drift, I understand that a lot of you hate-readers won’t just take my word for it. Well, how about his (White House)?
So Mexico is going to reduce by 100,000 barrels, and that would mean that they’re 250 to 300 barrels short. We’d make up the difference.
“We’d make up the difference.” Trump is so desperate to get this oil reduction agreement he’s willing to cut our own oil production in the process.
We’ll start with why this is such a terrible idea. It’s no secret that the efforts to slow down the coronavirus outbreak have had economic repercussions. I recommended some ways to address that last month.
That said, the one silver lining from the economic point of view was the lowering of oil prices, leading to falling prices at the gas pump and lower energy prices for a number of Americans. Workers deemed essential (practically the only folks still driving regularly these days) got a small boost to their financial situation. It’s a small compensation for what they have been doing for us, but it did exist.
Now Trump wants that to end. He is explicitly, openly, and brazenly trying to enact an oil reduction that would halt and reverse those price reductions. He is deliberately trying to raise gas prices.
What are the reasons behind this madness? I can think of two.
First, there is Trump’s usual economic ignorance. His complete inability to think beyond what is in front of his nose has led him to completely ignore second-order effects and unintended consequences. So instead of the businesses across America who are benefiting from lower gas and energy costs – a rare ray of sunshine for them – and the aforementioned gas price reduction for essential workers, he only sees and hears the wailing of the oil industry.
This isn’t the first time Trump has ignored American consumers (personal and business) in favor of the narrow interests of a production industry. It is the hallmark of his ruinous trade wars. Only this time, his protectionist nonsense collided with his usual populist instincts, which in this case had led to him railing about OPEC for decades. This month, we discovered which one was more important in Trump’s mind. His decision should surprise no one.
To be fair, a lot of Americans suffer from that economic myopia, but Trump being Trump, there’s more to this. His initial foray into this nonsense apparently came via a conversation with one of his favorite tyrants, Mohammed bin Salman of Saudi Arabia. Again, I’ll let him tell it.
“Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!”
In other words, Trump saw a chance to appease his two favorite tyrants and went ahead with it.
The tyrants win; American consumers and non-oil businesses lose.