Former President Donald Trump is truly treading dangerous waters. He will have to thread the needle between U.S. energy independence and international diplomacy amid the ongoing war in Ukraine. He’s taking all the personal credit for his “drill-baby-drill” agenda for the record-high levels of U.S. oil production. He argues that this approach gives the country the leverage it needs to pressure Russian President Vladimir Putin while avoiding keeping gasoline prices from spiking out of control for American consumers.
Speak out against the growing tensions in Ukraine. For now, Trump wants the war won but not so quickly that a jump in fuel prices contributes to rising public anger over rising war-time living expenses. His recent sanctions against Russia, however, carry the risk of undermining one of the few positive aspects of his economic policies: stable gas prices.
The challenge for Trump is significant. He will have to figure out how to stop or roll back Russia’s war effort. Simultaneously, he needs to make sure that American drivers aren’t forced to face exploding fuel prices. In the wake of these recent developments, analysts are forecasting upcoming increases at the pump. They argue that Trump’s actions are the most important driver of this possible increase.
Trump’s drill-baby-drill approach has fueled a U.S. oil boom, raising domestic production to new record highs. This boom has provided his administration a second wind it desperately needed. It is this new-found capacity that gives him the ability to apply more pressure on Moscow, perhaps forcing Putin to negotiate.
“If you want to send a strong signal to Russia, now is exactly the right time to do it when prices are low.” – Dave Turk
Polling data indicates voters are already signaling that Trump isn’t doing enough in addressing affordability concerns. As he faces scrutiny, political analysts emphasize that maintaining low gas prices will be critical for his continued support among constituents.
Former Biden official Dave Turk highlights the importance of focusing on affordability if Trump wishes to retain his political influence. One energy market expert, Andy Lipow, is on board with that sentiment. He maintains that today’s conditions allow the U.S. to adopt a more aggressive stance against Russia without incurring catastrophic domestic economic costs.
“The confluence of events has enabled the United States to take a harder line with Russia.” – Andy Lipow
There are warnings about potential consequences. Bob McNally, who was George W. Bush’s energy adviser. Mr. de Boer voiced his concern about the long-term implications of Trump’s sanctions. For example, he noted that the intention of sanctions is to cause economic suffering to Russia. He cautioned that Moscow could retaliate by slowing its oil production, a move that would unintentionally affect global oil prices.
Trump’s recent bailout decisions have already begun to distort markets. Only a few days ago, oil prices were at multiyear lows. They skyrocketed once sanctions against Russia were declared, with Russia being the world’s second-largest crude oil producer.
“The market is reacting with shock today. Many thought Trump would never do this.” – Bob McNally
Industry observers expect that under Trump’s pressure, Russia may continue to supply oil but at significantly discounted rates compared to Brent crude prices. McNally believes that Trump’s strategy will need to be carefully calibrated to ensure that it effectively weakens Putin’s position while safeguarding American motorists from excessive fuel costs.
Patrick De Haan, an energy analyst with gasbuddy.com, underscored the significant impact of these developments. He acknowledged that even if the first change in gas price is small, both consumers and political pundits will be watching really closely.
“It’s not going to be earth-shattering.” – Patrick De Haan