President Donald Trump’s insistence that his Iran war is nearly over is causing energy producers and the stock markets to misjudge what some believe could be a protracted military engagement. That miscalculation may lead to lower or insufficient oil and gas production — and ultimately large price spikes for consumers at the pump, Politico reports.
Trump’s “jawboning” has been largely successful, keeping oil prices lower than they would be, according to Politico. But there will be a price to pay.
A gas price shock that “hits people in the face” will come as summer travel heats up, Dan Pickering, chief investment officer at Pickering Energy Partners, told Politico.
“There’s a day of reckoning coming,” Pickering added. “It will be painful because I can tell you that the stock market’s ignoring this.”
That gas price spike could deal a “fatal blow” to Republicans’ chances of holding on to the House majority, Politico notes.
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Rosemary Kelanic of the libertarian-leaning Defense Priorities think tank says the Trump administration’s insistence that the war is nearly over is preventing energy companies from producing more. Why ramp up production if a return to normal is in sight?
Politico notes that if the war doesn’t end very soon, there won’t be enough oil for the world, Kelanic said.
Kelanic told Politico, “By talking down the market so effectively, when the price spike becomes inevitable, it’s going to hurt way worse because we’ll have lost weeks or even months of time where producers could have been ramping up output.”
Emma Anderson, author of “Oil, the State, and War: The Foreign Policies of Petrostates” and a senior fellow at the Stimson Center, a foreign policy research institute in Washington, told Politico that it will take months after the war for gas prices to return to normal.
“Prices at the pump are going to go up over time,” she said. “The costs of goods are going to go up as diesel goes up. Shipping will get more expensive. Trucking will get more expensive. The things you buy at the store will get more expensive.”
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