We at the Rio Grande Foundation have (blessedly) steered clear of the sturm and drang associated with national politics, especially (but by no means limited to) the current Administration. Sure, we opposed ObamaCare and supported Trump’s tax cuts, but generally oppose his trade policies.
All that being said, Trump’s latest statements on oil (an industry of tremendous importance to New Mexico) point to a fundamental misunderstanding of oil markets and America’s place in them.
Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!
— Donald J. Trump (@realDonaldTrump) April 20, 2018
Basically, Trump is stuck in the 1970s, a time when America really was dependent on OPEC for its oil supplies and embargoes sent shock waves through the US economy. According to the Energy Information Agency, the United States is the top oil producing nation in the world (production is surging in New Mexico, thus propping up our otherwise moribund economy).
The ONLY possible way that OPEC can “manipulate” prices upwards is by cutting production. So, every production cut by a foreign competitor raises prices for American producers and encourages more people to “drill baby drill” here in the US of A.
As for American motorists, sure, prices could be lower, but they can always be lower. As the chart below shows, it is hard to say that prices at the pump are anything but well within historical norms:
