WHAT CAN THE WHITE HOUSE DO?
My working assumption is that the oil market will add US$3 to US$6 a barrel to the headline worth for each day – each single day – that the conflict continues. Monday to Friday, that’s US$15 to US$30.
It’s bearable for one more week, maybe two, however any longer and the world will begin to incur critical financial injury by way of hovering power prices. In need of a really dangerous – and probably unlawful – intervention within the oil futures market, the White Home doesn’t have extra significant instruments to wield to carry power costs down.
Do I imagine the Trump administration is significantly eager about interfering with the futures market? You wager. Even the Biden administration thought of it in 2022 after Russia invaded Ukraine, earlier than realising it was too hazardous and unlikely to succeed.
The White Home has already thrown all the things it will possibly on the downside. Positive, it will possibly ask Congress to scrap federal gas taxes, as Biden did in 2022. However that will take time – and should in the end not win enough votes. US states, significantly these underneath Republican management, may announce their very own fuel-tax holidays, as some Democratic states did three years in the past. Trump can waive some environmental guidelines for gasoline and diesel too.
All these measures would purchase time at house – however internationally, the injury from rising oil costs would proceed. The White Home, cornered, might attempt one other device: an export ban on US oil and refined merchandise. That would definitely crash home costs, however ship international ones hovering. It could be an incredible mistake.
