Trump should 'take it easy' on OPEC tweets
Take it easy, don’t let the sound of your own pumps make you crazy. President Trump on Monday tweeted some advice to OPEC.
“Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!,” Trump tweeted.
The tweet was classic Trump, and not the first time he has attempted to bully OPEC. This time he is blaming the oil rich nations for the recent run up in crude, not to mention prices at the gas pumps, which according to the Lundberg Survey have risen 10 cents per gallon in the last 2 weeks. The current average at the pump is $2.395 per gallon as tracked by AAA.
Knowing how sensitive the American voter is to the price of gasoline, Trump is also realizing that the showdown in Venezuela could cause a major price spike at the gas pump this summer if it does not get resolved quickly. According to a GasBuddy survey, 65 percent of Americans say their spending is impacted by gas prices, while 40 percent say that rising gas prices impact their mood.
Their mood might get worse. You see, U.S. refiners have refined and depended on Venezuelan crude for over 50 years because of its heavy characteristics. To change course now and switch to light oil will not be easily achieved before this summer driving season.
OPEC is showing no signs of raising output, as they have slashed it to 30.83 million barrels a day in January, a four year-low. President Trump can tweet all he wants, but he has few options to get the cartel to change their oil-cutting ways.
There is talk that he may threaten to sign the No Oil Producing and Exporting Cartels Act, commonly known as NOPEC. The bill passed the House Judiciary Committee this month and could be headed for a vote before the full House. Yet OPEC might not care.
Meanwhile, U.S. oil producers are less than thrilled. Many U.S. shale producers had a very rough quarter, in part because Trump tweeted down oil prices late last year when he granted the waivers on Iranian oil sanctions, surprising many industry players. This has caused many to report steep drops in profits and may cause Wall Street, which in large part has helped fund the shale revolution, to cut back their investments.
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In fact, their advice to the president might be to relax and take it easy, because we got this Mr. President. We can keep raising production to counteract OPEC, unless of course you keep tweeting the prices lower.
Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn Learn even more on our website at www.pricegroup.com.PFlynn@pricegroup.com