Tuesday, April 14, 2020

Trump All Over The Place On Oil Prices

Indeed, are we surprised? But POTUS has reached a new level of hypocrisy on all this.

So a while ago when oil prices began falling sharply, Trump bragged about how much this was going to help consumers, and he should get credit for it, of course.

More recently, since WTI crude and even Brent fell below $30 per barrel (with WTI just over 20 right now, and Brent just over 30), he became worried about his pals in the oil patches of Texas, Oklahoma, and North Dakota, with Putin and MbS openly declaring they want to put US frackers out of business, oh dear.  So Trump piled in to strong arm Putin and MbS into supposedly making a production cut deal, maybe 10 mbpd, although unclear either of them actually following through solidly (and some others, such as Oman, pumping it up all the way). This got about a day or two's worth of a blip in the prices.

But now we find out that Trump has not agreed to any cuts in US production, and the prices have proceeded to plunge again, for better or worse.

This has led to something almost unheard of in more than half a century, the Texas Railroad Commission.  It has authority over number of days oil can be pumped in Texas, and it and its equivalent in Oklahoma are apparently contemplating intervening and on their own to reduce production in their states in order to try to prop up prices.  There was a time, back in the 1950s, when the Texas RR Commission was effectively OPEC, controlling global marginal production. That has not been the case for many decades, but who knows, maybe they will be back.

But then maybe Trump will not like this, given his recent claims about having "absolute authority" over all state entities and actors.  As it is, on this, he does not seem to know what  he wants.  But what can one expect from somebody who one minute is declaring himself free of "all responsibility" but the next is claiming "absolute authority"?

Barkley Rosser

1 comment:

rosserjb@jmu.edu said...

In today's WaPo, David Ignatius is patting Putin and Trump on the back for this deal, which supposedly will cut production by 20 mbpd, although that depends on several other nations getting on board, including Brazil and Canada, with Trump having strong-armed AMLO in Mexico a key to the whole thing, although Ignatius, usually very astute, seeming to miss that Trump has not really put forth US cuts in production.

This column was clearly the result of Ignatius talking to kirill Dmitriev, Putin's new international oil negotiater, and a Harvard MBA. There is a spin that this deal might lead to other negotiations between Putin and Trump, especially about arms control. I suspect this is why Ignatius is putting auch a positive spin on this, to try to encourage Trump on this matter at the behest of Dmitriev, who I suspect is also working on Putin on this matter. I would love to see it, but I fear both of them are just too distracted with other things.