Trump Guides Don't See High Oil Prices as All Bad

Trump Guides Don't See High Oil Prices as All Bad
Higher oil prices may not always be a bad thing for the U.S. economy, according to a White House report.

(Bloomberg) -- Higher oil prices may not always be a bad thing for the U.S. economy, according to a White House report.

Despite President Donald J. Trump’s tweets about oil prices being “artificially Very High,” his own advisers suggest the U.S. may eventually benefit from more costly crude.

“If the United States becomes an annual net exporter of petroleum, higher oil prices would, on average, help the U.S. economy,” the Council of Economic Advisers said in annual economic report posted online Tuesday. “In this case, the net gains for producers, and to their private partners that own mineral deposits, would outweigh the higher costs for consumers. Such a change would have a number of important policy implications.”

The Energy Information Administration has said that the U.S. will become a regular net oil exporter by the end of 2020.

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Kurt Anderson  |  March 21, 2019
Trump has often spoken to the price of oil and announced that it is too high, even in the $50-60 range. History has shown that low energy costs fuel a robust economy, despite the obvious effects on the oil business. On the other hand, high oil prices stifle economic growth and allow us a spiked "boom", after which our industry then suffers more years of "bust" than "boom". I may be in the minority, but understand that high oil prices mean our business becomes sloppy and wasteful, followed then by a "come to Jesus" period of time where we promise ourselves not to be so wasteful the next time activity resumes. A stable energy industry, minus the spikes up and down, is far easier to deal with in terms of planning and annual budgets. It allows operators to plan controlled expansion and production, as well as assign dollars to exploration and research. The U. S. can still be an energy exporter, but with our focus more on long term sustainable contracts as well as helping other allied nations which may not have the energy capacity we have. Lower energy prices also have the net effect of controlling the funding of military budgets of the bad actors in the world. Venezuela was the 800 lb gorilla when oil spiked up over $100, contributing to their perceived military prominence in South America and elsewhere in our hemisphere. Lower oil prices brought them to heel, where they are now a sickly 8 ounce monkey. When prices run up and super heat, the bad actors of the world fund their guns, tanks, rockets, and bombs with petro-dollars. China is the exception, and while they are not a willing ally, they do know where their bread is buttered (trade with the free world). They are not likely to squander that income source. Their economy warms up with lower energy costs as well as ours. The supposition that high energy prices is "good" for anyone but the highest rollers is narrowing a focus to a group who can most likely figure out how to make significant profit otherwise.