POTUS knows the parameters of local drillers to stay in business. $35 per barrel is a baseline break-even average. Anything north of that and drillers are making money.
Today WTI is hovering about $51 bbl which means wildcatters will keep working.
What POTUS won’t tolerate is Saudi dumping so that domestic oil prices crash below $25 bbl which bankrupts drillers. This is what Saudi Prince Allaweed tried doing during the Obamination era.
Things will be fine.
In case one hasn’t studied the history of Donald Trump, take note that he is a master at trade, finance, taxes, regulation, insurance, banking. He testified numerous times to Congress on matters of the economy, taxation, regulation. Members were hanging on his every word. The man knows more than 99.9% of everyone else when it comes to business.
Lower fuel prices translate to lower inflation. As the tariffs kick in, the fear of inflation is offset by lower energy prices. The Fed will have to come up with a real whopper to crash the Trump economy for 2020 by continuing to raise interest rates which is what they are now doing.
Going forward the USA is in a sweet spot, the sweetest I’ve seen in my lifetime. The USA is now the No. 1 oil producer in the world and can at anytime kick the Saudis in the *ss. This is huge but the liar media will not take it up as they are so in the tank to see the Trump economy get derailed in time for 2020.
For the record, I am a very strong Trump supporter. I agree that Trump uses all resources at his disposal to reach his desired result on trade, commerce, regulation, etc. However the point of the article, with which I agree, is that higher energy prices are a net positive to the US economy, given that we are now a net exporter of crude oil and refined products.
Trump is viewing the oil market through the lens of 1973, and not recognizing current reality that a strong domestic energy industry is vital to the US economy at large. When people complain that gas costs $3.00 per gallon, I want to ask whether the extra 0.25 they might save on gas is worth hundreds of thousands of high paying oil and gas jobs that will go away if prices remain at this level.
The industry is still growing at the moment because capital was allocated 6 to 12 months ago based on $60 to $70 per barrel prices. Once this fiscal cycle plays out, look for dramatically reduced capital budgets, much smaller production growth and a huge number of layoffs. Many, many people reliant on the industry and their families will be hurt by this disruption. We’ve seen this movie before and it is very ugly and totally unnecessary.