By Mark Sumner for Daily Kos
Daily Kos Staff
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In his first big post-federal indictment speech, Donald Trump made some very odd points before a Georgia audience. Speaking in a convention center with barely the capacity of a high school gymnasium, Trump spent much of his time in the way that many expected: Calling special counsel Jack Smith “deranged,” attacking the Department of Justice as a “sick nest of people who need to be cleaned out,” and blaming his indictment on President Joe Biden. As with most such events, Trump devoted the bulk of his appearance to his favorite subject: the hardships of being billionaire cult leader Donald Trump.
Trump got into other topics, like threatening the audience with World War III. But the most bizarre pitch of the evening may have been when he talked about how he got onto a “three-way call” with Vladimir Putin and “the king of Saudi Arabia” (it was actually the bone-saw-wielding usurper Mohammed bin Salman), to talk about oil production. Because Trump outright said that he didn’t do this to get the Russian dictator or the Saudi monarch to raise production and keep prices low. He called on them to cut production and drive up oil prices.
“I had to save the oil companies,” said Trump in his Georgia speech. “They were all going to go bust.” So Trump got his authoritarian super team together to squash global production of oil—and absolutely guaranteed that Americans would be paying at the pump. Then Trump and Republicans followed up with their next act—blaming Biden for high gas prices.
But at his speech in Georgia, Trump blamed Biden for something else. He blamed him for bringing gas prices down.
No sooner had Biden taken office than Republicans began to capitalize on the increasing numbers at the pump to insist that Biden was responsible for lower oil production, although this was explicitly the result of Trump’s deal. They put out deliberately misleading charts that moved around the dates of when Trump had taken office and when he had left, to make it seem like high oil prices were a Democratic policy. Trump and others began routinely lying about the price of oil when he left office and the price Americans paid at the pump.
But the real cause for the increase was never hidden.
The New York Times reported on the results of Trump’s actions back in April 2020 and how Trump managed to cut global production by 9.7 million barrels a day. As USA Today reported at the time:
President Donald Trump’s decision to negotiate with oil producing nations to cut production by nearly 10 million barrels a day is not only unprecedented, it also is the opposite of what prior presidents have done.
While others had tried to lower prices and increase availability, Trump was trying to raise prices for everyone and cut the availability of oil.
News of Trump’s direct intervention in the market—one of those things that conservatives like to rail against when a Democrat is involved—temporarily boosted prices by 24% in one day. But, as CNN Business reported soon after, Trump’s victory lap was premature. Despite getting his buddies to sign on to his idea, oil prices crashed to an 18-year-low within days of the deal being made.
The reason was simple enough: Trump’s mishandling of the COVID-19 pandemic had put the global economy into freefall, cut travel massively, and reduced the level of oil demand to the point where even his famous friendship with the other worst people in the world couldn’t get prices back to where it made Exxon stockholders happy. It was all so bad that Exxon’s profit in 2020 was only $163 billion.
But just because Trump’s deal with Putin and the Saudis didn’t provide the oil companies with an immediate boost doesn’t mean he didn’t do them an enormous favor. The oil market, like any commodity market, operates within a very, very narrow range of supply and demand, one so tightly constrained that news of reductions by a single country, or even an attack on a single refinery, can generate a global surge in prices. By convincing Russia and the Saudis to join in taking over 9% of the world’s global production offline, Trump ensured that there would be an extremely tight market the moment the world began to recover from the downturn he’d done so much to create.
Sure enough, as the economy began a rapid recovery under Biden, that lowered oil production level generated a tight market—one that saw companies like Exxon doubling their profits within a year. Trump’s cuts had done exactly what they were intended to do. It had reduced supply, bringing it below the level of demand and driving prices through the roof.
And, as The Milwaukee Independent reported in 2022, it wasn’t American oil companies who were really hurting most in 2020. It was one of the people involved in Trump’s three-way.
Between the pandemic-induced collapse in demand for oil and the price war Saudi Arabia was then fighting with Russia—two of the world’s largest producers — Putin was being pinched badly.
The Saudis were actually using the decrease in demand caused by the pandemic to try and put Russia out of the oil business by driving the prices below Russia’s relatively high cost-per-barrel of production. The Saudis could both produce oil more cheaply and were sitting on a huge stack of cash, so they saw this as a chance to permanently cripple their main rival, securing control of the market for decades.
Trump told them to stop. Reuters reported that Trump warned Saudi bin Salman that if he didn’t stop producing so much oil, the U.S. might stop selling him military equipment and withdraw U.S. troops from the area. That turns an extraordinary story about Trump working with global authoritarian leaders to raise American gas prices into an even more amazing story—Trump putting his relationship with bin Salman at risk to help Putin.
There’s no doubt that what Trump did helped oil companies. Exxon made almost as much money in the last quarter as it did in all of 2020. Its profits are at record highs. The Saudis have also benefited enormously, making a much greater profit on their oil and allowing them to reward Trump with trinkets like Liv Golf, played exclusively on Trump properties, buying out the PGA.
The only one who hasn’t really benefited is the person who Trump pulled out all the stops to help. That’s because Putin’s invasion of Ukraine has forced him to sell Russian oil at a huge discount, often at prices that barely exceed production costs.
And now Trump can stand on a Georgia stage, openly admit that he tried to raise gas prices for everyone to “save” oil companies that were actually raking in massive over $100 billion profits before Trump made his deal, and Republicans will applaud him for it.
As for Biden, Trump complains that he’s brought gas prices down “artificially” by taking oil from the strategic petroleum reserve. Which ignores the fact that this is exactly what that reserve is there to do, according to the Department of Energy.
The Strategic Petroleum Reserve (SPR), the world's largest supply of emergency crude oil was established primarily to reduce the impact of disruptions in supplies of petroleum products...
Disruptions like the one that Trump caused on purpose. And, though Trump likes to insist that Biden has “empted” the reserve, it still holds over 350 million barrels after Biden acted specifically to address the shortage Trump created.
Then they’ll stop on the way home, fill up their SUVs, and complain about how Biden raised their gas prices.
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