Trump’s Cheap Gas Promise Will ‘Destroy the Economy’ – Is It Worth It?
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Essay by Eric Worrall
hour/t My username – According to Huff Post journalist Student DayThe United States needs to keep gas prices high to prevent economic devastation.
Trump promises cheap gas. Too bad it could crash the economy.
Oil industry experts agree that there is no way he can offer gasoline at $1.70 a gallon without destroying the domestic oil industry and causing a severe economic downturn.
Via Student Day
August 22, 2024, 08:00 AM EDT…
The problem, industry experts explain, is that energy is bought and sold on global markets, and the only way gasoline can fall from its current $3.40 a gallon to $1.70 a gallon is if crude oil prices fall from $75 a barrel to $20 to $30 a barrel. And at that lower price, U.S. oil producers won’t be able to break even.
“That would bankrupt the U.S. industry. And the entire U.S. industry would shut down before that happened,” said an oil executive with decades of experience who spoke on condition of anonymity to avoid antagonizing Trump and his campaign. “It’s classic Trump. He talks hyperbole without any common sense.”
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Matt Randolph, another oil industry executive with more than three decades of experience in the industry, regularly posts videos on social media mocking politicians — both Democrats and Republicans — for their statements on energy.
In one videotape Last week, after an earlier example of Trump’s promise to cut prices in half, Randolph laughed off Trump’s promise, offering a scenario in which layoffs in the oil industry caused a recession. “This may be one of the dumbest statements Donald Trump has ever made,” he said in closing.
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If no market mechanism can cut prices that drastically, Trump will have to resort to government action. “The only thing left is massive subsidies for American consumers,” Randolph said. “And that’s not going to work.”
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The most disturbing part of the Huff Post article is that it comes across as an incredibly lazy piece of journalism.
Why “Student Day” Accusing Trump of planning a government subsidy? There is no evidence in the article that Dáte approached Trump to explain, he just went on a wild fantasy flight about Trump pushing for damaging government-backed subsidies.
Dáte’s other views seem equally weak. Matt Randolph, quoted by Dáte, seems to argue that more oil production in the United States is pointless.
… Randolph: Right now, we are producing 13.3 million barrels of oil a day. For 2023, we are averaging 12.9. And that is a record year. So we will set another record in 2024. But I don’t expect us to increase oil production much more this year because when we increase production, OPEC just continues to reduce. It is hard to say what our interest is in continuing to increase oil production if they just maintain high prices. …
Even if Randolph is right about prices, which I doubt, Randolph’s argument completely ignores the interests of US businesses and workers who are enriched by oil profits, rather than the money going to Middle Eastern oil barons. Improving the trade balance by reducing US outflows would also improve the purchasing power of the dollar and reduce upward pressure on inflation and interest rates, even if retail prices did not fall immediately. Moreover, if US production increases rapidly enough, there will likely come a point where OPEC’s unity will crack and producers will break ranks to try to squeeze as much profit as possible from a falling market. There is evidence that OPEC members’ ability to control oil prices and production levels is much weaker than they appear.
I’m not accusing Randolph of having ulterior motives, but there is a very clear reason why some major oil companies might prefer Biden/Harris policies over Trump policies. Biden/Harris passed laws that created a significant competitive advantage for large oil companies over smaller competitors.
Only large companies with large legal and accounting departments can comfortably afford environmental compliance costs under Biden/Harris.
Texas Oil and Gas Commissioner Slams Biden Administration’s Job-Killing Oil and Gas Regulations
December 5, 2023
AUSTIN – Railroad Commissioner Wayne Christian has issued the following statement regarding heavy methane rule proposed by the Biden administration’s Environmental Protection Agency (EPA).
“While the cost to hard-working Americans has risen nearly $11,000 “Everywhere from gas stations to grocery stores this year, President Biden’s solution to inflation is to increase regulations that make American oil and gas more expensive,” Commissioner Christian said. “Oil helps create more 96% of everyday consumer goods like plastics, food, medicines, etc. These new regulations on US oil and natural gas producers will certainly push prices up.”
“These new regulations could have a disproportionate impact on smaller manufacturers, which account for more than 83% of U.S. manufacturing. At a time when manufacturers are facing a funding drought from Wall Street and political obstacles from Washington Democrats, the last thing the industry needs is more red tape that stifles business,” Christian continued. “It is hypocritical to kill clean fossil fuel jobs here in the United States on the pretext of a clean environment, then beg our foreign competitors to produce more using much less environmentally friendly methods. Americans are struggling with high prices, and the answer to that struggle is simple—produce more oil and gas in the United States.”
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All the environmental regulations imposed by Biden/Harris may push financially struggling small companies into the hands of larger ones, either through outright mergers or by joining large corporate groups in exchange for the larger companies’ help in complying. Even small companies that retain some independence under the new order may no longer feel completely free to compete with and undercut the large companies they rely on for protection from the Biden/Harris bureaucracy.
US oil and gas M&A activity surged 57% last year amid industry consolidation
Via Nicole Jao
August 21, 2024 12:21 AM GMT+10
NEW YORK, Aug 20 (Reuters) – Oil and gas dealmaking activity jumped 57 percent last year as energy companies increased development spending, helped by higher cash flows from profits in previous years, according to a report released on Tuesday.
Top energy companies are set to spend $49.2 billion on mergers and acquisitions in 2023, up from $31.4 billion in 2022, according to a report, open new tab from Ernst & Young. The increase was largely driven by large deals between integrated oil and gas companies.
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Companies with a lot of cash are focused on driving efficiencies through scale and leveraging existing operations, he said.
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If Trump clears the bureaucracy, opens up new areas for exploration and restores full market access to lean, low-cost independent operators, freeing up small companies to try to drive prices down, consumers will benefit in one way or another. But the impact on the bottom lines of some of the big energy companies that have spent all their cash to buy struggling small operators could be disastrous.
Instead of using their market dominance to keep gas prices high, pocketing fat profits from the misery of ordinary consumers, the big players who took advantage of the Biden/Harris market distortion by spending all their cash to buy up struggling small players could suddenly be forced to compete on a level playing field with the small, efficient, lean operators who have resisted the acquisition frenzy, right in the middle of a painful consolidation exercise caused by all the acquisitions. The big money guys might have to cut wages. Some of them might even lose their jobs.
Day could have learned all this if he had bothered to do a little more research. The fact that such a lousy article by such a sloppy orange man was published, along with a fantasy about Trump’s policy platform, in my opinion, confirms the plummeting journalistic standards of what is now considered the mainstream media.
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