The Trump Plan for Oil

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Six long months ago when Donald Trump campaigned to become the 47th President of the United States (do you remember?) He promised to deliver a winning economy and reduce inflation. It seemed that the voters believed him.

More now. This week, the Conference Board published an survey showing that consumer confidence has fallen at the lowest level in 12 years and well below the threshold … which generally signals an upcoming recession. Worse still, voters expect inflation exceeding 6% due to Trumps prices considerably higher than last year.

This could be biased by partisan policy: Democrats are particularly dark, according to PEW data. And consumer feelings have a mixed predictive value.

But the conference committees survey is resumed by surveys elsewhere. And this week, Austan Goolsbee, a senior federal reserve official, warned that this feeling of feeling would make the Fed more difficult for rates, as Trump is bad (in part in order to avoid an explosion in debt).

So what can the White House do? An obvious solution would be to reduce anxiety and uncertainty about prices. But don't bet on what's going on soon, especially before Trump called the Liberation Day on April 2. The president thinks that the prices are a beautiful word, because they gave him a lever effect, and key advisers such as Peter Navarro deny that they are inflationists.

However, another problem to look at instead is the price of oil. Because this is now considered by certain Trump advisers as a crucial anti-inflation tool, although inadvertently which also reveals contradictions in their development of policies.

On paper, the vision of prevailing the fossil fuels seem clear. Scott Bessent, the secretary of the Treasury, has long defended an economic plan of three arrows. This targets a deficit of 3%, a growth rate of 3% and an increase in oil and gas production by the equivalent of 3 minutes barrels per day.

Bessent argues that Trumps Trumps Dring Baby Drill Mantra will stimulate American industry. This will also increase the geopolitical domination of the Americas, eliminating prices and providing the power of OPEC countries.

Most importantly, the drop in gas or gas prices could act as a deflationary force to compensate for the impact of prices, especially when associated with deregulation. At least Trumpland's argument goes. After all, energy is not only a large component of household expenditure; Pump prices are one of the most visible barometers of inflation for voters. They are a heuristic, as Daniel Kahneman says, the behavioral psychologist.

And as the drop in oil prices would also lead to producer savings such as Russia and Saudi Arabia, a secondary advantage increases the Trumps lever in any negotiations with these countries. Consequently, the chatter around the White House is that the president should target a price of $ 60, even $ 50, per barrel against about $ 70 today.

However, there are three big winds to face. The first is that Trump does not want to alienate the Saudi diet too deeply (although some advisers think they could compensate for lower prices by buying Saudi oil to reconstruct American stockings).

A second issue is revealed in an extraordinary survey published by the Dallas Fed this week. This shows that shale producers consider current economic chaos and chatting prices as a disaster that they refuse to increase production. Or as a respondent said: the threat of $ 50 oil prices per administration led our company to reduce its capital expenses in 2025 and 2026.

And while the Trump team tries to counter this with permit rules and performative attacks against renewable energies, JPMorgan calculates that the number of platforms has recently fallen. It is a clear and ironic contrast to what happened during the previous administration of Joe Biden, when the number of platforms jumped.

The third problem is Trump's geopolitical position. Instability in the Middle East, for example, recent attacks against Houthis generally increase the price of oil. The same goes for prices. This week, for example, oil prices increased after Trump threatened with sanctions, or secondary prices, against anyone who bought Venezuelan oil.

The next thing to watch is Canada. If Mark Carney, the new Canadian Prime Minister, wants to appease Trump, his best bet could be committed to selling (even) more than 6 million barrels of crude oil that his country produced every day in America (which is the largest consumer of global oil), at cheap prices.

Since Trump personally likes Carney, it could work. But it is not clear if Carney will play ball. And if he does not do so and Trump triggers a full -fledged trade war that could explode a cheap energy policy (even if a recession would normally lead to declining prices).

So if you are confused about Trump's energy plan, you are not alone. And although the promotion of such confusion is partly a deliberate tactic designed to increase the leveraging effect of administrations, Trump cannot forever ignore these consumer polls.

If inflationary expectations continue to increase, expect more memes of drill, baby, forest. Yes, it's partly a Trumpian challenge gesture. But it could still become a cry of despair.

gillian.tett@ft.com

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