Trump boasted about low gas prices. The conflict with Iran has taken a radical turn.
WASHINGTON (AP) — Since the start of a war with Iran caused oil and gasoline prices to spike, President Donald Trump has shifted from focusing on keeping energy prices low to portraying high oil prices as a positive.
The change of course comes as Trump’s team has struggled to offer a clear plan to open the critical Strait of Hormuz so tankers full of oil and natural gas are no longer stranded.
“The United States is by far the largest oil producer in the world, so when oil prices go up, we make a lot of money,” Trump said Thursday on his social media site.
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Just last month, in his State of the Union address, Trump boasted about gas prices at $2.30 a gallon, a figure that has since shot up more than 50% to a national average of $3.60 a gallon, according to AAA.
The about-face shows that Trump’s political interests at home are suddenly at odds with his desire to flex America’s muscles on the global stage. It comes at a precarious time for Trump’s party, ahead of the November midterm elections. Trump has said high gas prices helped him defeat his predecessor, Joe Biden. But he told reporters Saturday that he was not worried about rising costs that could sway voters this year and create pressure to end the conflict prematurely.
Investment bank Goldman Sachs said Thursday that, based on its forecasts and historical experience, higher oil prices would lead to higher inflation, slower growth and a higher unemployment rate by the end of the year.
Benchmark oil prices have swung wildly with Trump’s shifting statements and as most oil tankers avoid crossing the Strait of Hormuz. On Thursday, the global crude oil benchmark price jumped to $100 a barrel.
“The swings in Brent crude oil prices in recent days are striking and volatility is likely to remain due to the absence of a timetable for when the conflict will ease and when the Strait of Hormuz, which is effectively closed, will see traffic begin to recover,” analysts at consultancy Oxford Economics concluded on Wednesday.
The president has given a series of conflicting messages about his plans to address this issue. He said at a news conference on Monday that the Strait of Hormuz “is going to remain safe” long after it was identified as a danger zone, stating that the presence of the US Navy and insurance for tankers would keep things safe.
On Tuesday, he said on Truth Social that Iran would face “military consequences” that would be “at a level never seen before” if it placed mines in the Strait of Hormuz, and then emphasized that the US military was blowing up Iran’s mine ships.
On Wednesday, Trump’s Energy Secretary Chris Wright briefly posted that the U.S. Navy had escorted a tanker through the strait, then deleted the false claim.
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After initially downplaying the need to tap strategic reserves, Trump said Wednesday that the United States would join other countries in releasing oil to lower prices, and the administration later said it would withdraw 172 million barrels. Coordinated release between countries is unlikely to lower oil prices, or even stabilize the market.
“Such a move will slow, rather than halt, the rise in oil prices and offer temporary relief from the scorching rise in gasoline prices,” said Joe Brusuelas, chief U.S. economist at consulting firm RSM.
The White House also said it could waive Jones Act requirements to use U.S.-flagged ships to transport goods between U.S. ports, a temporary measure that White House press secretary Karoline Leavitt said could “ensure that vital energy products and agricultural needs flow freely to U.S. ports.”
Wright, the Energy Secretary, went on television Thursday to acknowledge that the conflict was causing “a significant disruption” to gas prices in the short term, but sought to emphasize the long-term benefits of an Iran that no longer poses a threat to the United States and Middle Eastern nations.
Trump had said Wednesday that “the straits are in very good condition” and said he thought oil companies should use them. But on Thursday, Wright was unable to provide a timeline for when the U.S. Navy would be able to escort oil tankers through the Strait of Hormuz, the bottleneck that caused prices to spike.
“It will happen relatively soon, but it can’t happen now,” Wright told CNBC. “We are simply not prepared. All of our military assets right now are focused on destroying Iran’s offensive capabilities.”
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News writer Collin Binkley contributed to this report.