US energy dominance would die under Trump's pledge to slash gas prices, energy expert says
Reuters
- US shale producers would lose market share if Trump's policies slash gas prices, Bob McNally said.
- "You cannot have $1.50 pump prices and a thriving shale oil sector. Period."
- A deep recession would be the only alternative to cut gas prices as low as Trump wants, he noted.
Donald Trump's campaign pledge to dramatically slash gas prices would risk ending US oil dominance, according to an energy market analyst.
Trump's plan to reduce prices by "half or more" within 12 months in office can only happen if Washington convinces Saudi Arabia to unleash a flood of oil supply, eroding US market leadership. The only other alternative would be to initiate a "catastrophic recession," Rapidan Energy Group president Bob McNally told Bloomberg TV.
"At $1.50 a gallon, US shale oil, i.e., energy dominance, dies," he said Monday. "You cannot have $1.50 pump prices and a thriving shale oil sector. Period. End of story."
Trump said on the campaign trail that he thought $1.87 was the "perfect" price for a gallon of gas.
The American Automobile Association's national gas price average was $3.026 on Monday, marking a 16-cent decline from a week ago.
Deregulation is a cornerstone of Trump's platform, and he has promised to let the oil industry "drill, baby, drill." Already in 2024, US oil producers have been pumping record amounts of crude.
McNally recognized that policy changes could push oil market prices to some degree, but oil prices are largely determined by demand and supply in the global market.
Experts previously told Business Insider that, despite Trump's best intentions, US producers aren't itching to boost output. Not only is domestic production already at all-time highs, but oversupply in the global market has eroded pries this year. If the US significantly bolsters the surplus, it could undercut industry profits.
"If oil prices drop, you're likely to see a natural decline in US oil production over the long run," Patrick De Haan, the head of petroleum analysis at GasBuddy, told BI in November. "Oil companies have shareholders to be accountable to."
The supply glut is anticipated to become the dominating force in the market through 2025. Meanwhile, McNally is monitoring rising geopolitical tensions in the Middle East. He cautioned about rising turmoil between Israel, Houthi rebels, and Saudi Arabia, which could come to threaten crude supply.