A barrel of West Texas Intermediate crude that closed at a price of $61.06 last year and at $98.17 just six years ago, closed at $21.51 yesterday. That translates into the lowest gasoline prices for Americans in many years. Since most of us are staying put these days, the primary beneficiaries are essential workers – nurses, doctors, food producers and vendors and government employees – risking their lives to keep us alive and fed.
This steep decline in gas prices is one of those ironic collateral benefits that accompany monumental calamities such as COVID-19. Air pollution is way down as is street crime.
Another thing that always accompanies colossal suffering is the opportunism of vultures. Price gouging and profiteering abound. Enter predator-in-chief Donald Trump, who last week tweeted “Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia and expect and hope that they will be cutting back approximately 10 million barrels, and maybe substantially more which, if it happens will be GREAT . . . could be as high as 15 million barrels. Good (GREAT) news for everyone!”
Trump’s current game of footsie with his authoritarian brothers is meant to achieve a big increase in oil and gasoline prices, which as he explained is “Good (GREAT) news for everyone!” Trump is using the C19 plague as an excuse to give big gifts to the US oil industry. Gifts that even the CEOs of Exxon, Mobil and Chevron have argued are not warranted.
The Trump administration says the low price of crude jeopardizes the domestic industry and America’s goal of energy self-sufficiency and its status as a net exporter of oil. The goal of self-sufficiency first became a national priority after the Saudis and their OPEC and OAPEC cartels assaulted the US and other Western industrialized nations with an oil embargo from October 1973 until March 1974. The result in the US: energy rationing, odd-even day fueling, unemployment at 7.2% and inflation of 12.3%. It also resulted in a worldwide recession and the end of the post-World War II economic boom.
None of this is necessary to save the US industry. While the current price of West Texas I and Brent (“light sweet”) crude are below the break-even of foreign and domestic oil producers, American drillers are less underwater than producers in the Emirates and in Saudi Arabia. Small domestic producers are also more nimble and capable of rapid curtailment and resumption of production.
Trump’s real agenda is not only to suppress output and cause an immediate spike in prices but also to grant a long stated wish of the domestic oil industry; the elimination or reduction of royalty payments for extraction on federal lands and the extension of the terms of federal oil leases.
For Trump there is no national trauma too big to not exploit for the benefit of his pals and to the detriment of his masochistic base.
 OAPEC was comprised of the Arab nation-members of OPEC plus Egypt and Syria.