TRUMPFLATION Makes Bank for Billionaires ... Even on Oil You Already Own!
This is why oil barons love, love, love them some war when you also pay for the war that makes them rich!
Trump is still maintaining that, as soon as the war stops, oil prices will fall and things will be back to normal. Trump noted today how the ocean is now full of tankers ready to deliver oil as his proof that prices will plummet. Sure, prices will fall temporarily in sudden relief, but they won’t normalize for years. One article today explains some of the longterm damage that will leave the world short in oil supply for a long time to come:
The common assumption that reopening the Strait of Hormuz will restore the flow of oil is physically wrong. I have been warning for months that this isn’t a pipeline you can just turn back on. The International Energy Agency now confirms that the global energy crisis triggered by this war has surpassed the combined severity of the 1970s oil shocks and the 2022 gas crisis…. That is not a prediction; it is a documented fact. Yet the mainstream media keeps repeating the lie that once the ceasefire holds, tankers will sail and prices will fall….
The oil wells of Iran, Iraq, Kuwait and the UAE are not like a garden hose. They are mature, low-pressure reservoirs that require precise gas injection to maintain flow. Once that flow stops, water encroachment -- what engineers call water coning -- traps oil behind barriers of saltwater that are nearly impossible to reverse. Worse, paraffin waxes and asphaltenes precipitate inside the wellbore tubing, clogging the rock pores with solid deposits….
Industry studies show that even short shutdowns of five days to a few weeks cause flow rate losses of 20-30%. The wells in Kuwait never fully recovered after the Desert Storm fires, and that was with only a few months of disruption. Now we are looking at months of no production, with many fields flaring gas instead of exporting it.
Trump claimed to be re-opening the strait (again) today by shepherding tankers through with US naval ships. Most shippers told him, “No thanks.” Try convincing them that not a single Iranian missile or drone or attack boat will make it through. If the Iranians only manage to light on fire one in twenty tankers that try passage, is there any company willing to risk something as expensive as a tanker on those odds?
Meanwhile, all the flared natural gas (done, among other reasons, to keep gas wells running, instead of plugging) is energy wasted forever and the world polluted for nothing.
This is what an energy crisis looks like
Already sixty countries are in crisis mode, adopting unusual conservation measures because they don’t have the easy access to their own oil that Canada or the US or a few other nations have. Here’s a short-listed sample of different types of initial measures being taken to ration oil::
Sri Lanka: Cars get 15 liters a week. Motorbikes get 5.
Myanmar: Odd/even driving days. QR codes to track every single fuel purchase.
Philippines: National energy emergency declares a 4-day government work week
Bangladesh: Fuel rationing for most vehicles. Markets shut at 6pm. More blackouts planned.
Thailand: AC temperature floors set.
Ireland: €505 million emergency package after fuel protests shut down major roads for a week.
Egypt: Restaurants shut at 9pm.
Zimbabwe: Ethanol blend in petrol raised from 5% to 20%.
Those kinds of measures will become widely used, and the types of rationing will become more diverse in short order. For many this will become the new norm for years to come as oil takes years to recover from the kind of damage briefly described above.
Meanwhile, other workarounds are being tried, such as shipping oil out of the Middle East via massive tanker-truck convoys that stretch for miles: (another reminder of the seventies)
I remember in the seventies similar lines of cars at gas stations stretching for blocks because many stations would be out of gas on any given day. Stopping for gas at the limited stations that still had fuel could take an hour.
The wartime profiteers
Meanwhile, the US has so much oil that it’s exports have surged … like this:
US oil companies are making bank like never before because all those extra shipments of oil are going out of the country at higher fuel prices than ever seen before—more volume at much higher prices with all the price gain pure profit. There is just one little wicked downside. It is happening at a premium cost to all US citizens for their fuel as well because they also pay the highest prices ever seen to compete for the oil. It is not costing the US oil companies any extra to produce that oil. So, all the extra money per gallon is pure premium profit.
While that may be revolting, that’s not the wicked part. There is an obscenity in all of this that Trump isn’t telling you as Trump boasts about how all of this is good for US companies: Much of the oil being shipped overseas is oil that all US citizens already own! It’s oil coming out of the national reserve and being pumped off to other nations. So, Big Oil is making megabucks in premiums off of publicly owned oil that you already purchased from them with your taxes! Much of the rest of it comes out of wells on US government land.
So, yes, you might well ask why you are paying 50% more at the pump while US oil companies refine oil from the national reserve and ship it out at huge windfall prices to other nations. And then you’ll pay taxes to replenish those reserves later.
Reaping the windfall
Where is Tariff Trump on charging high export tariffs to all US companies for the oil being sold outside the nation to recapture the massive windfalls of war because you are also paying for the war! Export tariffs equal to the windfall would cause oil companies to keep their prices down on fuel made from the oil Americans already own when sold to Americans by as much as the export tariff those companies would have to pay on all of their sales outside the nation because they would be left with the same profit margin off either kind of sale. Those tariffs would assure everyone in the United States benefits from the windfall of war (since they are all paying for the war).
The tariffs being collected by the US government off of foreign sales would be going straight into the pockets of Americans in the form of reduced fuel prices for Americans because oil companies would realize the same profit selling to you at $3 per gallon (by way of example) as they make exporting gasoline outside the nation at $6 per gallon if the US government skimmed a $3/gal. tariff off all the foreign sales.
At the same time, the windfall on foreign sales going entirely to the government, especially on crude it has already purchased and stockpiled, would help pay for the cost of the war with foreign money. And oil companies would still benefit simply by having all the extra sales at their normal profit margin. It is just a matter of setting the export tariffs at the right level to reap the windfall. You just have to find the sweet spot on US sweet crude that captures only the windfall on all foreign sales while leaving US companies the same profit margin on the extra sales they are used to.
Oh, the silence in congress and the Trump admin on that one!
That little blip from the national reserves equals 17.5-million barrels of oil released from the US Strategic Petroleum Reserve in the month of March alone.
Our country is being pulled into the role of global energy supply shock absorber.
And YOU are paying for it.
Think of how much Trump could reduce fuel prices for US citizens if he placed export tariffs to recapture the windfall premium being made on those 6.4-million barrels of oil (in the first graph) that are fleeing the country everyday, not just on the oil being pumped out of US reserves. Yet, the only thing you hear MAGA Republicans in congress saying about this is
“Short Term Pain For Long Term Gain!”
That is what Team Trump is selling to you right now. Except that they are not telling you it is all YOUR pain while there is only GAIN for Big Oil. Your pain is their gain. They are soaking up the enormous sloppy, black wealth, even on the oil you already own as a citizen by selling it to others for outlandish profits made as a pure windfall from the war that YOU ARE ALSO PAYING FOR on crude you already bought from them with your tax dollars Then you are paying again every time you buy gas! Pain on top of pain for someone else’s gain.
TRUMPENOMICS at work for the billionaires of Mar-a-Lago! Team Trump believes you should be glad that it is, at least, YOUR billionaires who are able to get rich off the national endowment of oil. THAT is Trumpflation! Bank for billionaires! Perhaps you should express yourself to them about how much of the surplus wartime profit you EXPECT to recapture from ALL publicly owned oil.
