Rising oil prices could affect the election, but the President has considerable power to lower them temporarily.
The great thing about high oil prices under a relatively free market is that they provoke oil production that eventually lowers them. The OPEC nations are trying to restrain production to raise the price, and the U.S. government’s work on discouraging the purchase of Iranian oil may also play a part.
But rising oil prices could hurt the Republicans in November. Will they?
OilPrice.com reports, “Can Trump Counter Soaring Gasoline Prices?”
Oil prices surged to their highest level in more than three years on Thursday, as the number and volume of supply outages continues to rise. The odds of a significant shortfall in supply are also growing by the day. With U.S. midterm elections nearing, the more oil prices continue to rise, the more likely it is that President Trump decides to tap the strategic petroleum reserve (SPR) to tamp down oil prices just ahead of the November vote.
The 180-degree turnaround in the oil market from May is pretty staggering, even for an oil market steeped in volatility and uncertainty. In late May, rumors of higher output from Saudi Arabia and Russia led to a crash in prices, and led to speculation of another lengthy downturn.
But the writer notes that we have an election coming up and the U.S. government has oil reserves it can release.
All of that is to say that the Trump administration will have no qualms about pulling barrels out of the salt caverns in Texas and Louisiana, and dumping oil onto the market to push prices down, especially as he faces political headwinds heading into the November midterm elections. The Congressionally-approved sales of the SPR, and the lack of uproar that it caused, would take the sting out of the political fallout from releasing oil from the SPR. Although, to be sure, the norms-busting President probably wouldn’t feel constrained by tradition anyway.
The oil market is tight and trending in a bullish direction, but the release of barrels from the SPR would be one of the few surprising developments that could hit the pause button on the rally in prices.