Who Is To Blame For Higher Gasoline Prices?

Presidents like to take credit for low gas prices and higher energy production, but the reality is a bit more complex than that.

As far as President Trump’s policies go, they should improve the economics for U.S. oil and natural gas producers. But since projects take multiple years to plan and complete, the differential between the status quo and the new policies won’t be felt for a few years. But if history is a guide, then the next President will take credit for any improvements that occur.

But, back to gasoline prices. If President Trump isn’t responsible, who is? Primarily these guys:

Organization of Petroleum Exporting Countries (OPEC) secretary general Mohammed Barkindo (L), Saudi Energy Minister Khaled al-Faleh (C) and Russian Energy Minister Alexander Novak (R). Photo credit AMER HILABI/AFP/Getty Images.

In late 2016, OPEC and Russia agreed to cooperate and reduce oil production by a total of about 1.8 million barrels per day. They have largely stuck to that agreement, and in turn global crude oil inventories have come down. As inventories have come down, the price of oil has risen. That, in turn, has resulted in higher gasoline prices.

It is possible that President Trump could exacerbate this situation with additional sanctions on Venezuela or Iran, but OPEC and Russia would likely raise production to offset shortfalls by those countries.

So don’t blame President Trump for higher gasoline prices. Also don’t credit him for higher oil production this year. While his policies might have some minuscule incremental impact during his current term, you can really thank Harold Hamm.

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