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Biden Can’t Stop it: Another Oil Boom is Building in America

The U.S. oil and gas business is already in a modest boom, and the Biden Administration will be powerless to stop it from growing.

Here’s an excerpt from a piece I wrote yesterday:

The history of the oil and gas business in the United States is that every time the “experts” all line up to declare it to be dead, it finds a way to come roaring back. This scenario has played itself out at least half a dozen times across my own 42-year career in the business or writing about it.

Well, guess what: It appears to be happening again. I was about to say that it appears to be about to happen again, but the truth is that the domestic oil and gas industry has already staged a significant comeback from the depths of its COVID-19-induced depression last summer. Take the Enverus Daily Rig Count as an example: On September 1, 2020, that metric showed the number of active drilling rigs in the U.S. sat at just 276 rigs, depressingly near its all-time low. As of today, that number has risen to 460 active and working rigs, a 2/3rds increase in just six months.

As well, the Primary Vision count of active U.S. frac spreads had recovered all the way to 175 as of February 12, more than double the count of just 85 as of August 28 of last year. That count fell all the way to just 41 active spreads during the disastrous arctic freeze event that struck Texas, Oklahoma and other shale states in mid-February, but had recovered back to 140 as of the last available count on February 26.

While those financial factors continue to place pressure on corporate producers to focus on cutting costs and elevating investor returns, as we have discussed several times in the past, the natural inertia within companies that are still run by engineers and geo-scientists – rather than investment bankers and accountants, as so many are now – is still to drill more wells. Healthier commodity prices only serve to magnify that natural internal inertia.

We certainly do have healthier commodity prices now. Goldman Sachs GS -0.6%, one of the bellwethers for those who like to pay attention to future oil price forecasts, recently raised its forecast for the mid-year West Texas Intermediate price to $72 per barrel. It is key to note that that increased estimate was published on February 22, well before the OPEC+ group surprised markets on Thursday by agreeing to essentially maintain its status quo on current production and export levels through the end of April.

Given that that announcement has already resulted in an increase of 10% in the price for WTI as of this writing Friday morning, Goldman and other price forecasters could have another increased estimate for WTI coming in the near future. In fact, Goldman Sachs raised its projection for 3rd quarter, 2021 Brent prices to $80 on Friday morning. “Key will be the potential shale supply response, although the latest earnings season suggests investors are still a long way away from rewarding growth,” the bank said. It simultaneously raised its forecast for 2022 U.S. shale production by 300,000 barrels per day.

[End]

Link to the Full Piece

But what about Biden’s energy policies, you might ask. What about that Keystone XL decision? What about that moratorium on new leasing on public lands? What about all the additional regulations to come?

Yes, all those policies designed to slow the domestic oil and gas industry down will have an impact, no doubt. But let’s look at how those moves will and will not impact the shale-based oil boom that is already growing:

  • KeystoneXL executive order – This presidential order that effectively cancels the northern leg of the KeystoneXL system would in and of itself have little, if any impact on a nascent oil boom in the Lower 48. The Keystone system’s purpose is pretty singular: To facilitate the import of large volumes of Canadian crude into the United States in a safer and more environmentally-sensitive way than bringing it in by truck or rail. It is not designed to carry large volumes of U.S.-produced crude, and would have no impact on America’s various shale plays.
  • Moratorium on new leasing on federal lands and waters – This could become more impactful should it be extended beyond its current 1-year term to last throughout Biden’s full 4-year term in office. This is solely because about half the lands in New Mexico’s part of the prolific Permian/Delaware Basin are owned by the federal government. Otherwise, America’s shale plays – especially those that focus on oil production – overwhelmingly lie on privately-held lands in places like Texas, North Dakota and the eastern half of Colorado.
  • New regulations by EPA/OSHA/DOI and other federal agencies – No question there will be a raft of such new regulatory actions coming into effect in the coming years. For the oil industry, this will make the EHS/Safety/Regulatory Compliance departments big growth areas within companies and trade associations. It will also be a very good time to look for government relations jobs within the industry. But again, many of the regulations we’re talking about here would apply only on federal lands and waters, and the industry has proven to be quite resilient in dealing with major new regulatory actions that apply nationwide. As a result, we will see companies by and large be able to quickly adopt their business practices, finding innovative new ways to comply with the new regulations. They will be a nuisance for sure, and result in slightly elevated costs of doing business, but such regulations will not be able to halt the nascent boom that is building.

So, while the Biden Administration will no doubt continue to come at the industry with actions designed to limit its ability to do business, taken together they will be able to somewhat mute the boom that is building, but won’t be able to stop it.

Bottom line: as long as the OPEC+ agreement holds together and those countries remain willing to withhold some of their oil production, America is headed for another oil boom. In fact, we’re already in it.

That is all.

Today’s news moves at a faster pace than ever before. Whatfinger.com is the only real conservative alternative to Drudge. It’s the tool I use to help keep up with all the day’s events, and it should be your tool, too.

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U.S. Oil Industry Has Bigger Problems than Biden Fracking Ban

The U.S. oil business has bigger potential problems than Joe Biden’s promised fracking ban. There is no doubt that the Biden/Harris promise to ban hydraulic fracturing on federal lands and waters would severely hamper the nation’s oil and gas business sector.

In addition to curtailing about 20% of U.S. oil production that comes from federal leases, such a move would cause capital flight away from oil projects in the U.S., regardless of land type since it would send a signal that government policy in a Biden administration would present a high degree of risk and uncertainty. This is an outcome an already capital-strapped industry can ill-afford.

But as impactful as that potential problem would be, U.S. oil and gas producers face an even larger looming headache this morning: Uncertainty about the continuation of the OPEC+ agreement, the deal among large oil producing countries to limit output and exports onto the global market. The existence of that agreement currently has its member nations withholding about 7.7 million barrels of crude per day from the market. It is the main reason why the current U.S. benchmark price for West Texas Intermediate, which currently hovers above $45 per barrel, hasn’t collapsed back down below the $20/bbl mark.

Read the Rest

 

 

 

 

 

 

That is all.

Today’s news moves at a faster pace than Whatfinger.com is the only real conservative alternative to Drudge, and deserves to become everyone’s go-to source for keeping up with all the latest events in real time.

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$70 Oil by the end of the Year? It Could Happen.

What a difference three months makes. Three months ago today, Russia and Saudi Arabia had just embarked on a completely irrational effort to flood the global oil markets after Russia had basically blown up the OPEC+ supply limitation agreement when it balked at making an additional few hundred thousand barrels of oil per day (bopd) in cuts.

But on Saturday, those same two big producers cajoled the rest of the countries participating in OPEC+ to extend the deep, 9.7 million bopd May/June supply limits through the end of July. The cuts had been scheduled to scale back to a combined 7.7 million bopd on July 1. Reuters reports that Saudi Arabia has now reduced its daily production by 2.24 million bopd from its market-flooding level in April, while Russia – which could not stomach a reduction of about 200,000 bopd back on March 4, has cut its own daily production by more than 900,000 barrels.

It’s pretty amazing how single digit – and even momentary negative – crude prices will change an oil minister’s perspective on what constitutes an appropriate level of output.

The OPEC+ members also pledged to monitor and reassess appropriate supply levels on a monthly basis, beginning with their next meeting, which is scheduled for June 18.

Combined with dramatic reductions in crude output in the U.S. and Canada and a more-rapid-than-expected recovery in demand, the extension of the OPEC+ May/June quotas sets the stage for a more rapid re-balancing of the global markets. Bjornar Tonhaugen, Rystad Energy’s head of oil markets, said that “Today’s deal is a positive development and, unless a second Covid-19 wave hits the world, it will be the backbone of a quick recovery for the energy industry. That is due to the oil stocks decrease that we will see as a result of the production deficit. Stocks are now what keep prices at relatively low levels and the quicker they fall, the faster we will see prices rise.”

Read the Full Piece Here

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Negative Crude Oil Prices: Not A Matter For Celebration

The NYMEX price for West Texas Intermediate (WTI) fell into negative territory on Monday, the lowest level ever recorded, and the only real question is why was anyone surprised by this turn of events?

Think about it: As much as we like to talk about renewables and the Green New Deal and all the other pop-culture things, the global economy still runs by and large on oil and natural gas. Demand for oil is entirely dependent on economic growth. As the U.S., China and well over 150 other countries have gone about closing down vast swaths of their economies to try to deal with the COVID-19 pandemic, some are estimating that economic growth in the U.S. for April could be negative 25-30%, and May isn’t looking to be much better.

The result of this negative economic growth has very predictably been a collapse of demand for crude, with some experts again estimating it to be in the negative 25-30% range for April. The consequence of that particular train wreck is that tens of millions of barrels of produced crude with nowhere else to go are flowing into storage facilities in the U.S. and across the globe. Given that the NYMEX price for WTI is set on a forward month futures contract, that negative price we saw on Monday is basically a projection of the market’s belief that U.S. storage will be completely full by May 20.

When that happens, many producers without market leverage will be faced with a choice between shutting in their wells or actually paying someone to take their oil away. We have to remember that wells drilled into some reservoirs can lose pressure and be difficult or impossible to restart once they have been shut-in.

Even worse, that negative price in effect becomes a bleak leading indicator of what traders think the state of the U.S. economy will look like in late May barring drastic changes. Looking at the gradual, staged plans most state governors are now rolling out to govern the reopening of their respective economies, no such drastic changes appear to be in the offing. Thus, we should expect these negative or single-digit prices for WTI to linger for days or even weeks before beginning to recover.

Read the Rest at Forbes.com

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Texas Oil Regulator Poses The Fundamental Question: “How Do We Start?”

After taking more than 10 hours of verbal testimony from more than 50 witnesses at Tuesday’s hearing, the three members of the Texas Railroad Commission tabled any decision on whether to move to limit oil production from Texas wells through its power of prorationing. During the course of the hearing, Commissioner Christi Craddick hit on the fundamental impediment that will likely prevent the RRC from any quick implementation of limits: There is no institutional memory on how to do it.

“We don’t know how to do it at the agency anymore,” Craddick said to one witness who was around during the last time the RRC enforced prorationing back in 1972. “Do we start on Jan. 1? Where do we start? How do we start?”

Exactly. As much as many struggling independent producers would like to think the Commissioners possess some magic bullet power that would boost prices and help them survive the most severe oil industry downturn in modern times, reality tells a different story. No one working at the RRC today was there in 1972, and even if they were, the industry the Commission regulates has fundamentally reinvented itself at least half a dozen times since then. The Commissioners and their current staff can read all the history books on the market about the golden age of prorationing, but that wouldn’t be much help to them in implementing new production limits soon.

Commissioner Craddick’s mention of a possible January 1 date for trying to implement the change is very telling. If professional industry analytical firms like Rystad EnergyIHSMarkit and Wood MacKenzie are accurate, the immediate crisis in global oil over-supply will have been resolved well before then, and oil prices should be well on their way back up to higher levels. It is equally likely that dozens of Texas oil producers will have been forced into bankruptcy in the meantime.

Another potential logical date of implementation would be September 1, which is the start of Fiscal Year 2021 for the Texas government. Even if the RRC currently possessed the budget and staff to meet that quick goal (it possesses neither) it is quite likely that the Texas industry will have already lost upwards of 2 million barrels of daily oil production by that time due to dramatically-lowered drilling activity and voluntary shutting-in of production.

Then there is the other practical limiter that the commissioners must consider: The budget. The Texas government famously operates on a two year budget cycle, with the legislature meeting for 140 days in odd-numbered years to make biennial adjustments. The RRC is currently operating under a budget that does not expire until August 31, 2021. Any upward adjustments to that budget designed to enable the Commissioners to hire in additional staff and build new computer systems to implement and police prorationing would have to be authorized by a special session of the Texas Legislature, subject to a call by Governor Greg Abbott.

Think of how unlikely that is to take place at a time when Texas is currently functioning under an executive order to avoid gatherings of more than 10 people due to the COVID-19 pandemic. Also consider how unlikely Gov. Abbott and the legislature would be to agree to increase any agency’s budget during this time of massive economic destruction.

Read the Rest at Forbes.com

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OPEC+, G20 Produce A Very Dim Light At The End Of A Long, Dark Oil Price Tunnel

After the OPEC+ countries produced an oil supply reduction agreement on Thursday that amounted to a half-measure at best, industry observers had pinned some hope on a firm commitment to further cuts coming from G20 call that took place on Friday. Those hopes were not fulfilled, as the G20 communique included only vague language indicating those nations would work towards “market stability.”

The language in the comminique reads as follows: “We commit to ensure that the energy sector continues to make a full, effective contribution to overcoming COVID-19 and powering the subsequent global recovery. We commit to work together in the spirit of solidarity on immediate, concrete actions to address these issues in a time of unprecedented international emergency. We commit to take all the necessary and immediate measures to ensure energy market stability.”

In this political season in the U.S., that reads like issue-specific talking points from a candidate trying to say something to placate the public and media without really taking either side of the issue.

Leaving matters even more up in the air, Mexico refused to commit to its full share of the OPEC+ cuts, saying it could only reduce its own production by 100,000 barrels of oil per day (bopd). U.S. President Donald Trump intervened to commit to his country to supporting Mexico’s part of the deal by supplying 250,000 bopd in cuts of its own, but left the process of how he would achieve that level of firm supply reduction unclear. This is a key question since the national U.S. government has very limited power to force firm reductions in production by the private companies that operate all wells in the country.

Canada, which has not been a participant in any previous efforts to control supply, also remained non-committal in terms of committing to any firm reductions of its own.

Read the Rest at Forbes.com

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The OPEC++ Deal: Calling it a Half-Measure is an Exaggeration

Let’s be honest: The so-called OPEC++ agreement to cut 10 million barrels of oil per day from global crude oil supply is a half-measure. Really, with Rystad Energy reporting that demand for oil will drop by 27 million bopd from January 1 levels during April, calling it a half-measure is an exaggeration.

Even this half-measure has still not been finalized, as Mexico’s government still has not committed to holding up its end of the bargain as of this writing on Friday morning. So, anything could still happen. All of which explains why the oil markets reacted negatively to the OPEC++ announcement, with oil prices dropping by more than 15% in just a few hours.

But here at least are the parameters of the agreement that are being reported Friday morning:

– OPEC++ (the OPEC nations plus Russia, Mexico, Canada, Brazil and several others) agree to cut 10 million barrels per day of exports from April through July;

– The cuts drop to 8 million bopd from August 1 through December 31;

– The cuts further fall to 6 million bopd beginning January 1, to continue for the next 16 months;

– The cuts include no formal contribution from the U.S. oil and gas industry.

President Donald Trump will discuss his views of America’s contribution to a reduction in global supply in a call involving the Group of 20 – or G20 – on Friday.

 

Read the Rest at Shalemag.com

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Russia’s Skepticism Over U.S. Oil Production Cuts Is Well-Grounded

Bloomberg reported Wednesday that Russian oil representatives are expressing skepticism about the potential for the the U.S. oil industry to participate in global deal to cut crude production in a real, sustaining way. That skepticism is well-grounded in reality.

With the Trump Administration thus far offering only what it calls “automatic” cuts that will take place in the U.S. as drilling activity drops and oil wells are shut-in as the result of low demand, Russian government spokesman Dmitry Peskov told reporters, “You are comparing the overall demand drop with cuts aimed at stabilizing the global market. These are completely different things.”

He’s right.

The problem is, as I pointed out over the weekend, is that, absent quick and certain action by regulators in Texas and other states or an emergency declaration by the Trump Administration designed to shut down production in the Gulf of Mexico and on federal lands, any U.S. contribution to a global supply reduction deal must by law be market-based, and thus, temporary. Unlike Russia, Saudi Arabia and many of the OPEC nations, the U.S. oil industry consists of thousands of companies competing in a free market, and the national government cannot cause production to rise or fall on a whim. The situation is further complicated by the fact that any such move by the federal or state governments would be politically controversial and opposed by certain segments of the U.S. industry itself.

Today In: Energy

There is little doubt that, should current market dynamics persist into the third and fourth quarters of this year, overall U.S. crude production will drop dramatically, with Citigroup, Inc. projecting it to be down by over 1 million barrels per day by October. Frankly, that seems to be a conservative estimate. The trouble in the context of this envisioned global agreement is that, once demand is to a large extent restored, the U.S. industry would simply come roaring back to fill the void, absent some artificial governor on its activities.

Read the Rest at Forbes.com

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State Regulators Hold The Key To U.S. Participation In A Global Oil Supply Deal

The energy media was filled with speculation on Friday and Saturday about how much higher crude prices might spike on Monday as OPEC and Russia prepared to hold an emergency conference call meeting that day. That speculation has now evaporated as the call has been postponed, now scheduled to take place on Thursday.

As the Wall Street Journal reported on Sunday, “Saudi Arabia and Russia have said privately they are unlikely to cut oil output unless North American producers join in.” While Canada has signaled its willingness to be a part of a larger, global approach to cutting supply, it is unclear how exactly officials from Russia and Saudi Arabia envision the United States joining the party.

I’ve written about this several times in the past, but it deserves repeating here: America is simply not like these other countries. It is called the “United States” for a reason. The federal government of the United States has no existing authority to just cause oil wells to be turned off and on at the snapping of a president’s fingers.

Yes, as we saw in the wake of the tragic Macondo blowout and spill in April, 2010, a president can declare an environmental emergency and cause all production to be shut in in the Gulf of Mexico. But beyond 3 miles of the coastline (roughly 12 miles offshore Texas) the Gulf of Mexico is a federal province. The order issued on May 27, 2010 by President Barack Obama to shut-in Gulf of Mexico production applied only in waters of 500 feet or more in depth, limiting it to areas safely within the federal province. In this way, he avoided challenges from state governors that would have certainly resulted had he attempted to shut down the entire Gulf, including all state waters.

This is what the United States calls “federalism,” and it is a concept that leaders in many other countries appear to have a very difficult time grasping. Given that the great preponderance of U.S. oil production comes mainly from beneath state and private lands, solving the conundrum of any U.S. participation in any global agreement to limit oil supply will necessarily involve participation from key state regulators.

In states like Texas, North Dakota, Oklahoma, Wyoming and New Mexico, which together are producing the preponderance of U.S. crude oil, regulatory bodies possess various authorities to limit production within their state borders. Those states combined to produce about 68% of the oil produced in the U.S. in January, the latest month for which the U.S. Energy Information has data. Another 15% was produced in federally-owned waters in the Gulf of Mexico and off the Pacific coast.

Thus, at least in theory, roughly 83% of U.S. oil production could be artificially limited by the federal government and state regulators on a coordinated basis. It is important to note that this kind of coordination is the only real way for the U.S. to become a meaningful part of any such deal.

Read The Rest at Forbes.com

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Putin Is Ready To Cut Oil Supply, But Demand Destruction Still Grows

Russian President Vladimir Putin said on Friday that, after sending the oil markets into a massive crash a month ago by blowing up the OPEC+ exports limitation agreement, his country is now ready to work with OPEC and other countries to implement far deeper cuts to crude production than OPEC+ had ever envisioned.

Speaking in a televised video conference, Putin proposed an arrangement that would result in removing 10 million barrels of crude oil per day from global supply. As reported by the Khaleej Times, “Putin’s dramatic change of tack from his unyielding stance of non-cooperation with the Opec in further output cuts came in the wake of a truce brokered by US President Donald Trump ahead of the upcoming Opec plus meeting scheduled for April 6.” The price for West Texas Intermediate closed at $28.34 per barrel on Friday, up by 40% since Wednesday, when news of Trump’s engagement with Putin and Saudi leader Mohammed bin Salman became public.

Has President Trump, the famous deal-maker, worked a deal that will save the U.S. domestic oil and gas industry? Let’s don’t get ahead of ourselves. While a global deal that would remove 10 millions barrel from daily oil supply would certainly help firm up oil prices, we have to remember that the effort by Russia and Saudi Arabia to flood the market only impacted the supply side of a two-sided equation. Crude prices had already dropped by more than 30% into the low-$40 range in early March before OPEC+ blew up, thanks to massive global demand destruction caused by the COVID-19 pandemic.

With the U.S. intentionally shutting down its own economy during March in a strategy to slow the spread of the virus, that demand destruction has only intensified over the past 30 days, with some projecting as much as 25% of world-wide demand for crude oil having been lost, or about 25 million barrels per day. We should also realize that, with so much anticipation now focused on it, if the upcoming emergency meeting of the OPEC+ countries should somehow fail to bear fruit along the lines proposed by Putin, then the price will come crashing back down.

And even if a new deal does get done, it will only address one side of the equation. There will still be much work to be done to return the domestic oil and gas industry to some level of health.

Read the Rest at Forbes.com

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The Shale Daily Update – 4.3.2020

Here are 10 things you need to know about oil and gas for April 3, 2020:

Trump calls on Russia and Saudi Arabia to cut oil production – Excerpt:

The Trump administration is pressing OPEC to hold an emergency meeting as early as next week to try to end the standoff in the oil market that has threatened to cripple the U.S. oil industry, three industry and government officials familiar with the talks said.

The U.S. pressure is aimed at persuading Saudi Arabia — which has also called for a meeting — and Russia to declare a ceasefire and reverse the export increases that have drowned the global market in crude even as the coronavirus pandemic has decimated international demand.

The White House has not yet decided who, if anyone, it would send to a possible OPEC meeting next week, the industry and government officials said. Candidates included Secretary of State Mike Pompeo, Department of Energy Secretary Dan Brouillette and Trump’s son-in-law and adviser Jared Kushner, the people said.

Oil Extends Gains As OPEC Leaders Call Emergency Meeting To Discuss Trump Production Cuts – Well, guess the pressure from the President worked, as OPEC called a special meeting overnight. The cartel will hold its meeting next week via “emergency teleconference,” which one supposes must be more urgent than just your ordinary, everyday OPEC teleconference.

OPEC+ Debates Biggest Ever Cut as Virus Destroys Oil Demand – It’s worth noting that Russia’s oil minister denied the narrative told in this New York Times report, but Russia says all sorts of things that end up not being accurate. Let’s hope this is one of them.

 

Read the Rest at Shale Magazine

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For the U.S. Oil and Gas Industry, the Time for Alarm Has Arrived

Today’s Energy Update 

I’m no fan of alarmism, whether it be about energy, the environment or any other subject, but the situation for the domestic oil and gas industry has grown somewhat alarming over the past two months. Since early January the S&P Oil & Gas Index has plunged 32%. Investors appear convinced not just that there is oodles of oil in the world but that the spread of Coronavirus brings the risk of economic flatlining in the biggest growth market for oil — China.

With the virus set to spread and the OPEC+ group running out of options to contain the oil glut, the price of West Texas Intermediate (WTI) crashed through the important $50 level this week, and promises to slide further. Chevron yesterday sent home 300 workers in London over virus fears. Thus, a year that began with a fairly promising outlook is rapidly devolving into one that will present a fight for survival for some domestic producers.

The statement on Tuesday by Dr. Nancy Messonnier, an official at the U.S. Centers for Disease Control and Prevention (CDC), that spread of the Coronavirus in the U.S. was “inevitable,” and that citizens here should begin preparing for an outbreak will certainly work to further inflame the markets. President Donald Trump has reserved television time for a statement designed to calm the situation on Wednesday night, but it could come too late to prevent further disruption in the commodity and financial markets.

Meanwhile, the U.S. market for natural gas remains chronically over-supplied with no real relief in sight. Although the NYMEX price per MMBtu has remained fairly stable during the first two months of the year, it is stable at a price that is far too low for many natural gas producers to remain profitable.

All of these factors now combine to create a precarious situation for heavily-leveraged companies as they head into debt re-determination season. Chesapeake Energy is a good example. When I wrote about that company’s long, difficult struggle to survive last November, Morgan Stanley had just lowered its price target for CHK stock from $2.25 per share to $1.25.

But it isn’t only independent producers who are finding the current market conditions to be challenging: Even ExxonMobil, despite its prime position in the Permian Basin and major international discoveries over the past two years, is experiencing a disturbing rate of value destruction. As noted by Bloomberg, XOM stock dropped to a 15-year low on Monday and fell further on Tuesday, “just over a week before Chief Executive Officer Darren Woods is scheduled to present the oil explorer’s long-term strategic plan to investors and analysts.” For the year, XOM is now down by almost 25%.

Read the Full Piece Here

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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Trump Tweets, OPEC Blinks

The Evening Campaign Update

(Because The Campaign Never Ends)

Tired of all this Winning yet? – If you’ve been irritated by how much it’s cost you lately to fill your car with gasoline, well, cheer up.  President Trump is on the case.

In fact, if you believe the folks at Bloomberg, he’s already caused the Saudis to blink and start working to get up to another 800,000 barrels of oil per day onto the global market in an effort to stabilize the price for crude oil at current or slightly lower levels.  Given that crude is the raw material from which gasoline is refined, a halt to the rapid rise in that commodity’s prices that has taken place in the last year will also stop the rise of the price at the pump.  Crude prices dropped more than $3.00/barrel (roughly 5%) on Friday in response to the Saudi/OPEC announcement of their intention.

So, how did President Trump accomplish all of this?  Optically at least, he did it with a single tweet.  On April 20, the POTUS took to his famous Twitter feed to slam OPEC for the rapidly rising price of gasoline as Americans headed into the summer driving season:

As Bloomberg reports, the Trump tweet produced an immediate reaction among the various OPEC ministers:

OPEC officials were in a meeting at the opulent Ritz-Carlton hotel in Jeddah on Saudi Arabia’s Red Sea coast when Trump tweeted his views and they immediately saw it as a significant intervention.

“We were in the meeting in Jeddah, when we read the tweet,” OPEC Secretary General Mohammad Barkindo said on Friday. “I think I was prodded by his excellency Khalid Al-Falih that probably there was a need for us to respond,” he said. “We in OPEC always pride ourselves as friends of the United States.”

Given that, unlike his immediate four predecessors in office, President Trump does not hesitate to lever negotiations over seemingly unrelated matters into one another, using all of the influence of the United States to obtain positive results, these OPEC countries also have developed a new-found sense of respect – likely bordering on fear – for expressions of concern coming from the U.S., even when they come from a Presidential tweet.  Perhaps even especially when they come from a Presidential tweet, come to think of it.

Now, probably there was more to this new attitude suddenly being expressed by OPEC countries.  The Bloomberg story cites a recent congressional hearing covering proposed legislation that would attempt to make OPEC and other commodity cartels subject to the U.S. Sherman Anti-Trust Act, and there have likely been negotiations between U.S. and officials from Saudi Arabia and other OPEC nations taking place behind the scenes since April 20.   But there is no doubt at all the President’s tweet got this ball rolling.

So, when you next go to fill up your car and notice that the price of unleaded has dropped a dime a gallon in response to Friday’s 5% drop in the price for crude oil, you know who to thank.

Isn’t it nice to have a President who’s looking out for our interests instead of the interests of some nebulous “international community?”

That is all.

Follow me on Twitter at @GDBlackmon

Today’s news moves at a faster pace than ever. Whatfinger.com is my go-to source for keeping up with all the latest events in real time.

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