Senate Democrats are urging President Donald Trump to rein in OPEC with pump prices at a three-year high, and even send his energy secretary to the cartel’s June meeting to reinforce the message.
The reality is that Trump has few tools at his disposal to make life more bearable for motorists as the summer driving season approaches, other than reversing some major foreign policy efforts, such as sanctions on Venezuela or walking away from the Iran nuclear deal. Tweeting hasn’t worked: Crude has rallied six percent since the president tweeted last month that rising oil prices "will not be accepted."
Still, Senate Democratic Leader Chuck Schumer exhorted the president to “stand up to OPEC” at a press conference in Washington on Wednesday. In a letter to the president, Democrats including Rob Menendez and Ed Markey called on Trump to send Energy Secretary Rick Perry to next month’s OPEC summit in Vienna to press the case for stable crude prices, a suggestion shrugged off by analysts.
“The influence of the U.S. on an OPEC meeting is basically zero,” said Thomas Cape, senior analyst at Evercore ISI in New York.
Still, the senators urged Trump to begin international dispute proceedings against countries that “artificially inflate” oil prices, as well as boost the use of biofuel alternatives and abandon plans to roll back fuel-economy standards.
The simplest way for the president to influence oil prices, according to Cape, would be sell off some of the nation’s emergency oil reserves, created decades ago to protect against supply disruptions. The stockpile currently stands at about 661 million barrels. Flooding the market with crude just as supply is tightening could weaken prices.
“It’s the only viable option on the table,” said Cape. “The evidence suggests it can be an effective tool but it’s got to be deployed and structured properly to achieve that.”
Congress has already authorized several sales of reserve oil through 2027, but they’re staggered in such a way that they’re unlikely to move markets.
Trump may be a hostage to a fortune of his own making, after blaming former President Barack Obama for high gasoline prices when his predecessor was in power.
The price of gasoline has climbed 19 percent this year to $2.95 per gallon, the highest level since November 2014. High prices are eroding the gains from Trump’s historic tax cuts. The average middle-class household saw annual tax-cut savings of around $930, and every $1 rise in gasoline prices will eat up about half of that, or $500, according to analysts at Height Securities LLC.
“What they got in the tax break just got washed away in higher gas prices,” said Senator Maria Cantwell, the top Democrat on the Energy and Natural Resources Committee.
Given the global nature of the oil market, it’s hard to shelter anyone from the impact of higher prices.
“The reality of the world price of crude oil is that we can produce as much as we want here, but as long as it’s a globally traded commodity, we are going to feel it here,” said Kevin Book, managing director at the research and analysis firm Clearview Energy Partners LLC in Washington.
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