May04

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GOP 53

Trump Is Running Out of Ways to Lower Gas Prices

Polls has shown that the increase in gas prices is forcing many people to alter their lifestyle. A WaPo-ABC News/Ipsos poll from last week shows that War 44% of Americans are cutting down on driving, 42% are cutting household expenses, and 34% have changed vacation plans. Some people have done two or more of there. The gas price spike has not gone unnoticed. What's a president to do?

We have repeatedly noted that the president does not have a big green button on his desk labeled "Lower gas prices." However, he does have a few knobs he can twist that can help a little. Unfortunately for Donald Trump, he has already twisted most of them to the max. Here is what he has already done:

• Release Oil: The U.S. maintains a Strategic Petroleum Reserve for emergencies. The current situation probably qualifies as an emergency, so Trump has authorized the release of 172 million barrels of the 400 million in the Reserve. By flooding the market, that should drive prices down somewhat. Maybe it has. We can't tell what the average price of gas ($4.44 this morning) would have been without the release. It might have been higher.
  
  
• Waive the Jones Act: The Jones Act is actually Sec. 27 of the Merchant Marine Act of 1920. It requires that all seaborne shipping between U.S. ports be done in ships constructed in the U.S., and owned and crewed by U.S. citizens or permanent residents. The idea is to protect the U.S. shipping industry. Trump has temporarily waived the Act, so in theory a Panamanian-flagged ship could transport Texas crude from Houston to a refinery in New Jersey. However, shipping contracts are usually long-term arrangements so it is unlikely many foreign shipping firms will have ships lying around idle to grab the opportunity.
  
  
• Degrade the Environment: There are federal rules about how much ethanol can be blended with gasoline. The blend varies by season. Trump has suspended the rules to temporarily allow a more polluting blend to be used this summer.
  
  
• Lift Russian Sanctions: There are extensive sanctions on Russian oil and penalties for companies worldwide that traffic in it. Trump has lifted the sanctions temporarily, in the hopes that Russia will now flood the market with oil, which will force prices down. Of course, this will also help the Russian economy and help pay for the very expensive war in Ukraine that has dragged it down.

There aren't a lot of power tools left in Trump's toolbox. Among those that are unused so far are these:

• Reduce the Federal Gas Tax: The federal gas tax is 18.3¢/gal. on gasoline and 24.3¢/gal. on diesel fuel. Trump could try to suspend that, even though he has no legal authority to do so. If he did, gas stations might decide to drop their prices only a little bit and keep the difference themselves. Another problem here is that the gas tax money feeds the Highway Trust Fund, which pays for highway maintenance. The fund is already in trouble due to more efficient cars, so cutting off the funding would mean less maintenance.
  
  
• Jawbone States on Their Gas Taxes: Trump could also try to talk states into cutting state gas taxes while keeping the federal one intact. States are not likely to be enthusiastic about cutting off their revenue source while the feds keep their source going full blast.
  
  
• Ban Oil Exports: Although the U.S. is roughly self-supporting on oil, a lot of oil is imported and a lot of oil is exported. Not all oil is the same and the system is optimized for the lowest price. For example, the U.S. imports heavy sour oil from Venezuela because some Gulf Coast refineries are set up to process it, rather than the light sweet oil from Texas. Some of the Texas oil is exported to Japan. This may sound odd, but it makes business sense to the oil companies. The oil companies have long-term contracts for exporting oil and are wildly against breaking them for any reason lest their customers come to regard them as unreliable suppliers and seek more reliable sources elsewhere.
  

In short, there aren't a lot more things Trump can do other than tell people that their wallets are lying and gas is actually very cheap. (V)