By Zack Colman
Reducing our dependence on foreign oil is a hallmark of U.S. energy policy. So it was a little perplexing that President Trump was encouraging major oil-producing nations to pump more crude to aid American drivers.
“The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!” Trump tweeted on July 4.
That’s a reversal from four years ago. The U.S. oil and gas industry feared that full-throttle production from OPEC would suffocate the shale gas boom. Global oil prices plummeted with foreign production, falling to between $20 and $30 per barrel after reaching more than $100 per barrel — a level that nourished the hydraulic fracturing bonanza.
The oil and gas industry has grown accustomed to Trump’s unpredictability. While energy firms embrace his administration’s efforts to slash regulations, they’ve bristled at his overtures on trade. His encouraging tweets to OPEC, a longtime enemy of the U.S. industry, fell into that latter reaction.
“I have to be truthful; it doesn’t sit well with me,” said Kathleen Sgamma, president of the Western Energy Alliance.
“If your goal is energy dominance, increasing the world’s reliance on OPEC is not the natural path,” added Dean Foreman, chief economist with the American Petroleum Institute.
Experts said there are several reasons for Trump’s recent lobbying of OPEC.
The market realities are different from when bargain-priced barrels of oil flooded the market. OPEC and Russia agreed in 2016 to rebalance the market. Supplies in Libya, Nigeria and Venezuela have tightened. Oil demand has grown.
Then there are the politics. Voters are sensitive to high gasoline prices, and those prices are rising as Republicans control the White House and Congress, and as the November midterms are closing in.
“Four years ago, pumping at max was considered market manipulation,” said Sam Ori, executive director of the Energy Policy Institute at the University of Chicago. “It just shows that people like to say OPEC is manipulating the market, but sometimes they want them to.”
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