Oil prices have come off in recent days, though they do remain at much higher levels than at the beginning of the year. A big part of why global oil prices rose above $75 per barrel was President Trump’s move to further isolate Iran.
Trump and Pompeo are clearly not afraid to roil the global oil markets and create chaos in the process. The dynamics that run the global oil market are nuanced, but both Trump and Pompeo both know that cutting both Iranian and Venezuelan crude production will spike oil prices higher.
What may not be so obvious to the world is that the USA is the biggest pumper of crude oil there is, and a rising oil price will certainly help numerous global corporations who have been investing in the US shale oil boom.
The US Dollar-An Oil Currency?
Commodity currencies are the fiat currencies from countries that produce a lot of natural resources. Canada and Australia are commonly given as examples. Now the USA is the world’s largest producer of crude oil, as well as a major supplier of grains like corn and soy.
As the US chisels away at some of its oil-producing political enemies on the global stage, one wonders if a higher oil price is built into the strategy. A generation ago US oil production was low, but today, it is the highest in the world.
Oil is a globally traded commodity, and that means that a rising oil price won’t benefit normal people in the USA. On the other hand, big producers like ExxonMobil would see a substantial increase in profits from its US shale oil operations if oil prices spike, as shale oil recovery tends to be more expensive than conventional systems.
‘America’ First, Regular People Last
It is impossible to know if higher oil prices will actually come as a result of Trump’s wild policies, but they seem more likely all the time. The US as an economic entity is in far better shape today when it comes to tolerating (or profiting from) higher oil prices, but the everyday person isn’t.
In fact, the lower 90% of the US population is in far worse shape today than they were a decade ago. While unemployment looks low, the methodology that creates unemployment statistics has been changed to make the situation look much better than it really is.
Higher oil prices at the pump mean a lot of pain for most of the people in the USA and massive profits for big companies and their backers on Wall St.