President Trump is fighting against his instincts and election-year precedent by pushing for higher oil prices, which would make gasoline more expensive.
Trump has acknowledged feeling “a little torn” in recent press briefings about his pivot to supporting lifting prices amid a historic price crash.
In one breath, Trump has likened low oil prices to a “big tax cut” for U.S. drivers, and in the next, he has implored Saudi Arabia and Russia to decrease oil production to prop up prices because “we don’t want to lose our great oil companies.”
“The price of oil is like the Goldilocks story,” said Tom Pyle, the president of the American Energy Alliance and the former head of Trump’s Energy Department transition team. “If it’s too low, it’s not good for producers, but good for consumers in a normal situation. If it’s too high, it’s not good for consumers. The price has to be just right.”
“What I am seeing is Trump is legitimately agonizing over it,” Pyle said.
Trump seems to have settled for now on pushing for higher prices as he wrestles with a fear of losing support from the fossil fuel industry and workers. The oil and gas industry supports about 11 million jobs throughout the economy.
“He is vulnerable, and he knows he is vulnerable,” said Mike McKenna, a long-time fossil fuel industry lobbyist who left his job as White House energy adviser last month.
Paul Bledsoe, a former White House energy adviser to President Bill Clinton, considers Trump’s shift to be “a stunning reversal of typical election-year policy” with limited political upside, given fossil fuel states are primarily solidly red and supportive of Trump.
“The world has turned on its head,” said Bledsoe, who now advises the Progressive Policy Institute. “The political danger for Trump is he seems far more obsessed with helping the oil industry than average consumers around the country.”
Yet Trump has more leeway to push for higher oil prices given that Americans are less able to enjoy the benefits of low gasoline prices as governments force people to stay home.
U.S. motor gasoline consumption will fall by 1.7 million barrels per day in the second quarter of this year compared to the first quarter, the Energy Information Administration projected Tuesday.
“Lower gasoline prices are not really doing anybody a whole heck of good,” said Sasha Mackler, director of the Energy Project at the Bipartisan Policy Center. “The benefits that would typically be seen as the countervailing factor against the pain in the oil sector aren’t visible or helpful right now because there aren’t a lot of people spending on travel.”
Still, Trump’s shift to support higher prices, at least temporarily, has been stark, subjecting him to criticism from Democrats who say he’s favoring the fossil fuel industry over consumers.
“As more than 10 million workers suddenly find themselves without a job, Trump is shamefully cozying up with oil and gas executives, increasing prices at the gas pump in order to protect the profits of polluters,” Rep. Kathy Castor of Florida, chairwoman of the House Select Climate Committee, said in a recent statement.
Trump has urged Saudi Arabia and Russia, the two largest oil producers outside the United States, to slash production by at least 10 million barrels per day ahead of a crucial OPEC meeting Thursday. There, oil-exporting countries aim to reach some sort of agreement to reduce production to counter the historic drop in prices, chiefly caused by falling demand for oil and fuels from the coronavirus pandemic.
Before now, Trump has taken an opposite view, repeatedly criticizing Saudi-led OPEC and Russia for forming a pact in recent years to cut production in order to raise the price of oil. Oil prices have stayed relatively low during the Trump administration, but nothing like the current moment, partially because of record U.S. production from the shale boom.
Mackler says the unusual situation has created “tension” with normal political positioning on energy prices. Democrats are criticizing Trump for seeking to raise low oil prices. But low oil prices generally harm the economic case of cleaner alternatives that Democrats favor. With cheap gas, people are less likely to switch to electric-powered vehicles or consider mass transit, for example.
The research group Wood Mackenzie projected Wednesday that electric car sales will drop 43% in 2020, due primarily to the coronavirus and low oil prices.
“Democrats could be hurting their own long-term agenda for sure,” Mackler said.
Whatever the case, Pyle and other Trump supporters said the president has little reason to bend over backward to help the fossil fuel industry given the flexibility of shale companies that can easily ramp up production when prices rise again and the resilience of Trump’s support in most oil-producing states.
“Maybe with the exception of swing states Pennsylvania and Ohio, fossil fuel states have been through the long horizon on these issues, and it’s ingrained in them there are ebbs and flows in the market,” Pyle said. “I don’t see them shifting their allegiance away from the president.”
