Shock from Iran war has Trump’s vision for US energy dominance flailing

Record domestic oil and gas production hasn't saved US drivers from price spikes.

See full article...

 

[FranzJoseph]

Now that's the kind of syndicated article I can really appreciate! Detailed and a deeper dive into the subject. Nice job, ICN!

That the US refineries aren't equipped to handle the "sweeter" US oil is a point that has come before. I guess that re‑equipping them would be just too costly, and borne by the American consumers anyway in the end.

Plus exports and domestic prices don't happen in a vacuum – if there are higher prices elsewhere, domestic ones follow since most oil companies would rather get paid the higher price elsewhere.

 

[Tactical Finesse]

Good article. One caveat I'd add:

The United States has made an aggressive push to be a bigger part of the global LNG market, with Trump seeking to secure major purchase agreements from trade partners like Japan, the EU, and South Korea. But the eight existing US LNG export terminals are already running at full capacity. Although Trump has vowed to bring more capacity online, construction, and permitting of the complex multibillion-dollar facilities take years.


As a result, US exports of LNG, about 15 billion cubic feet of gas per day, are currently limited to only 11 percent to 13 percent of total US natural gas production. The situation leaves the United States with an abundance of its top fuel for electricity even while other countries are scrambling to stretch their supplies.

There have been 2 dozen new LNG export terminals either permitted or being built--since before Trump took office. Some of them were temporarily suspended by Biden, because LNG and LNG terminals are horrendous for the environment. But ultimately LNG export terminals just mean more profit for US companies--it doesn't do anything for US consumer energy prices (Trump's obsession), although it might make things better internationally (depending on how charitable the LNG companies feel)

More being built isn't really because of Trump, he is just wanting future credit for things that would have happened anyway.

 

[mvrhov]

Stop complaining. In Europe it's been more than 2€/l so that would be what 7.57€/gallon or almost 9$/gallon. And it's been mostly because of you.

 

[CanardDeCourse]

Good article. One caveat I'd add:


There have been 2 dozen new LNG export terminals either permitted or being built--since before Trump took office. Some of them were temporarily suspended by Biden, because LNG and LNG terminals are horrendous for the environment. But ultimately LNG export terminals just mean more profit for US companies--it doesn't do anything for US consumer energy prices (Trump's obsession), although it might make things better internationally (depending on how charitable the LNG companies feel)

More being built isn't really because of Trump, he is just wanting future credit for things that would have happened anyway.

American LNG was attractive because Russia turned out to be an unreliable partner (who would have guessed?) In many parts of Europe, there is a sentiment that giving the US further leverage is tantamount to suicide. It will take time, but American LNG will be a stopgap measure, not a long-term arrangement.

 

[ubercurmudgeon]

"But, but, Trump is rich, so he must know how the economy works."

-- Every MAGA moron being made poorer by his actions

 

[Tactical Finesse]

Stop complaining. In Europe it's been more than 2€/l so that would be what 7.57€/gallon or almost 9$/gallon. And it's been mostly because of you.

Well it isn't exactly "because" of the USA your gasoline is expensive. Gasoline production isn't fixed--they increase or decrease it based on consumption.

Gasoline in the USA is artificially cheap (and yes we should stop complaining)--because it isn't and hasn't been taxed properly for decades, as opposed to other countries who have been more successful at doing so. And by not doing so--use (or "need"), and thus dependence on cars, is therefore incentivized massively.

And the result is for everyone to see. The USA is compltely addicted to cheap gasoline--if it isn't cheap our country collapses. There's no way of travelling most of the country without a car and gasoline. There's basically no public transit, and outside of the NYC/DC corridor there's zero passenger rail. There's no money for it. Further the gas taxes we do collect--don't pay for the maintenance cost obligations of the absurd and comical amounts of roads infrastructure the US has.

If you think taxes should be Pigouvian, that is the tax should cover the negative externalities at a minimum...The US federal gasoline tax doesn't even cover the economic damage from the motor-vehicle deaths that happen annually. IIRC the price of a human life was somewhere around $10,000,000, and there are something like 40,000 motor vehicle involved deaths annually.

 

[Wheels Of Confusion]

It's unfortunate, but really nobody could have seen this outcome ahead of time. The mysteries of oil prices are vast and ineffable. Supply, demand, who knows what that's about? Mere mortals cannot hope to comprehend such an esoteric and completely alien set of Lovecraftian cosmic forces, forces beyond our ken. These outcomes, as with all negative outcomes of our actions, are completely opaque to foresight and planning. Nothing could have been done to avoid this fate. The only certainty is that the Democrats are to blame.

</S>

 

[Tactical Finesse]

American LNG was attractive because Russia turned out to be an unreliable partner (who would have guessed?) In many parts of Europe, there is a sentiment that giving the US further leverage is tantamount to suicide. It will take time, but American LNG will be a stopgap measure, not a long-term arrangement.

Also because of the frantic US buildout of NG and fracking infra--it wasn't possible to export or consume enough fast enough--that for a while the spot-price of US LNG was actually negative. They've been flaring off massive amounts of NG because it is being produced faster than anyone can consume it or store it.

 

[MilanKraft]

We could neatly sum up this article and others like it as: when the blatant lies and clueless over-simplifications of "American Energy Independence", meets the ugly reality that much of the oil we extract goes not into American gas refineries, driving down our prices, but often goes elsewhere...

...even by Trump's own admission on his recent Untruth Social posts, paraphrasing, "tankers from all over the world are headed here to load up!" (What he doesn't tell us is, this is business as usual, because many of those tankers are loading up on types of oil that are not refined for gas but for other things. Because that's how it's always been.)

The US has been one of the world's leading extractors and exporters of oil for roughly a decade now, and were a major producer prior to that (facts lost on the politicians and talking head jackballs on TV)... but that won't stop our gas from hitting $6/gallon, likely just in time for 4th of July. Perhaps if nothing else, Americans of all stripes will learn a simple lesson from all this, as they struggle with gas prices this year: "drill baby drill" has not ever, and will not now, drive down the price of American gas!!"

That is partly because: the type of oil we extract matters (i.e. much of it is not the type used for gas production); the type of refineries we have matters; where the pipelines go matters; how many terminals we have in a given location matters, etc. We don't get a say in what kind of oil is available under our feet and our coastal waters; it is whatever it is, and it doesn't all just magically translate into "more gas for 'muricans!"

In the end, most of the drill baby, drill oil goes straight into the international commodities market like everywhere else, and is priced accordingly (by the market, not us!). The sooner the average American figures this out, the sooner they will see through the campaign and talking head lies about our oil business (and hopefully be smart enough to not vote for the next clueless or disingenuous asshole who promises "energy independence by drillin' mo'!"

 

[Hort]

Trump's war is just another instance of him living in the moment, maximizing revenue for him, his family and his cronies. The number of individuals who have repeatedly bought short or made significant investments mere days or even hours before Trump makes a speech that moves the energy markets, or drops a bomb, then realize obscene profits in the market the very next day... it's appalling. Meanwhile, he shames our allies and champions the likes of Orban. He is incompetent as a president. We are embarrassed as a nation.

 

[Tactical Finesse]

We could neatly sum this article and others like it as: when the blatant lies and clueless over-simplifications of "American Energy Independence", meets the ugly reality that much of the oil we extract goes not to being refined into gas and used here, driving down our prices, but often goes elsewhere...

...even by Trump's own admission on his recent Untruth Social posts, paraphrasing, "tankers from all over the world are headed here to load up" (what he doesn't tell us is, this is business as usual because many of those tankers are loading up on types of oil that are not refined for gas but for other things. Because that's how it's always been.

The US has been one of the world's leading extractors and exporters of oil for almost a decade now (a fact often lost on the politicians and talking head jackballs on TV)... but that won't stop our gas from hitting $6/gallon, probably just in time for 4th of July. Perhaps if nothing else, Americans of all stripes will learn a simple lesson from all this, as they struggle with gas prices during our 250th year: "drill baby drill" has not ever, and will not now, drive down the price of American gas!!"

That is partly because: the type of oil we extract matters (i.e. much of it is not the type used for gas production); the type of refineries we have matters; where the pipelines go matters; how many terminals we have in a given location matters, etc. We don't get a say in what kind of oil is available at all these places we find it; it is whatever it is, and it doesn't all just magically translate into "more gas for 'muricans!"

In the end, much of the drill baby, drill oil goes straight into the international commodities market like everywhere else, and is priced accordingly (by the market, not us!). The sooner the average American figures this out, the sooner they will see through the campaign and talking head lies about our oil business (and hopefully be smart enough to not vote for someone who is promising "energy independence by drillin' for mo' oil!!"

The "drill baby drill" crowd, fundamentally, mistake that gasoline-production (a for-profit activity) as a public utility (for everyone's benefit). Which is rudimentary economics.

I had a relative who during the Great Recession had a great-paying job on the North Slope. BP had done an end-around the offshore-drilling ban, built an artificial island, and then plopped the world's most powerful oil drilling rig on top of it. Ethics and legal arbitrage, and environmentalism aside...it was a very cool engineering project--the idea was to drill down--then horizontally out--then down again miles from the island and down into the oil. The needed to make a rig powerful enough to not only turn miles of pipe, but have the pipe stack be strong yet malleable enough to basically be bent off axis and reverse bent back.

Which...the contractors who built the rig--didn't supply any documentation. So they had to from-scratch reverse engineer all the plumbing diagrams. Which took years,.

Now Liberty needed oil to be above like $100/barrel to be worth the effort....and by the time the ON switch was ready to be flicked, prices had collapsed to $60. In fact the North Slope as a whole needed like $80/barrel to be profitable IIRC. Relative lost their job when they sh%tcanned Liberty and wrote the entire billions dollar project off as a loss.

 

[mathguru]

Do they vote against their economic interests because they believe they’re temporarily inconvenienced future multi-millionaires? Or is it so they can justify their hatred to themselves enough so that they don’t develop acute catoptrophobia?

<why not both gif>

 

[Tallawk]

From what I'm reading here, it seems if there was an actual reason for starting this war (dubious, but hear me out), it was to make American oil exports more attractive, thereby enriching American legacy fossil fuel companies. Bonus, it punishes California.

 

[fitten]

Trump, because of his old age, ignorance, and where his money comes from is clinging to coal and petroleum (1800s tech) while the rest of the world moves on to newer tech. Because of Trump and his cult, the USA has handed over leadership in all energy tech on a silver platter, not even trying to compete, and the USA will be a consumer of energy tech from other countries, mostly China, for a long time to come. And they think this is a good thing, somehow.

 

[Tormesa]

John Bolton talks about advising Trump about all this in the first administration.

Now he has to blame his way out of a mess he was warned about.

 

[Anton Longshot]

MAGA: "We sure showed 'them' who's boss!"
New Iran leadership: "This the best thing that ever happened to us!"

 

[BananaBonanza]

Stop complaining. In Europe it's been more than 2€/l so that would be what 7.57€/gallon or almost 9$/gallon. And it's been mostly because of you.

As someone already said, the absolute cost is mostly because of tax.

The absolute increase is about the same as in the US (ignoring taxes).

But crucially, the relative increase was actually smaller in most of Europe, because it was taxed so high.

High taxes soften the blow from energy crises, because expensive gas is already priced in and the price shock is more moderate. Also, the economy and consumers are already prepared for expensive energy, because they have made different investments (i.e. they already had to think of efficiency).

On average, I would say, oil price increases suck much more for US citizens than Europeans. That’s why the US is willing to fight for oil and most European nations aren’t. It ultimately does suck for everyone, though. (Except the producers on this side of the Straight, course)

 

[Sajuuk]

Is it journalistic malpractice to imbue the Trump regime with any vision beyond being grifting bullies? There’s no path to “energy dominance” for America and its horse buggies against the future.

 

[no_great_name]

Fortunately for most Americans, the price of gasoline is becoming increasingly irrelevant as the transition to electric vehicles continues to gain momen- what’s that? We axed all the incentives, disrupted the markets for renewables with chaotic changes to the regulatory landscape, and sowed uncertainty and mistrust of EVs with consumers?

Well shit.

 

[informationsuperhighway]

So PUTs print on monday.

 

[informationsuperhighway]

Is it journalistic malpractice to imbue the Trump regime with any vision beyond being grifting bullies? There’s no path to “energy dominance” for America and its horse buggies against the future.

Sanewashing will continue.

 

[YetAnotherPoster]

Well it isn't exactly "because" of the USA your gasoline is expensive. Gasoline production isn't fixed--they increase or decrease it based on consumption.

Any message which starts from a premise like that given current events has fallen flat on its face at the first hurdle. And yes, the US government is responsible for current events.

 

[pnellesen]

It's unfortunate, but really nobody could have seen this outcome ahead of time. The mysteries of oil prices are vast and ineffable. Supply, demand, who knows what that's about? Mere mortals cannot hope to comprehend such an esoteric and completely alien set of Lovecraftian cosmic forces, forces beyond our ken. These outcomes, as with all negative outcomes of our actions, are completely opaque to foresight and planning. Nothing could have been done to avoid this fate. The only certainty is that the Democrats are to blame.

</S>

For a moment I thought I was reading Karoline Leavitt’s latest press release, but then I realized there was no effusive praise for Trump’s handling of the situation, so I knew it was fake.

 

[Erbium168]

From what I'm reading here, it seems if there was an actual reason for starting this war (dubious, but hear me out), it was to make American oil exports more attractive, thereby enriching American legacy fossil fuel companies. Bonus, it punishes California.

I'm sure that is why Exxon doesn't want Trump removed, but the root cause of the war was that Bibi started it and Trump then had to join in so as not to look weak.

 

[CleanGreenMachine]

Fortunately for most Americans, the price of gasoline is becoming increasingly irrelevant as the transition to electric vehicles continues to gain momen- what’s that? We axed all the incentives, disrupted the markets for renewables with chaotic changes to the regulatory landscape, and sowed uncertainty and mistrust of EVs with consumers?

Well shit.

 

[numerobis]

Now that's the kind of syndicated article I can really appreciate! Detailed and a deeper dive into the subject. Nice job, ICN!

That the US refineries aren't equipped to handle the "sweeter" US oil is a point that has come before. I guess that re‑equipping them would be just too costly, and borne by the American consumers anyway in the end.

Plus exports and domestic prices don't happen in a vacuum – if there are higher prices elsewhere, domestic ones follow since most oil companies would rather get paid the higher price elsewhere.

The refineries have paid a ton of money to have the extra equipment to convert cheap oil (produced elsewhere) into the same stuff they’d get out of expensive oil (produced locally). Why turn it off?

 

[ajmas]

As someone already said, the absolute cost is mostly because of tax.

The absolute increase is about the same as in the US (ignoring taxes).

But crucially, the relative increase was actually smaller in most of Europe, because it was taxed so high.

High taxes soften the blow from energy crises, because expensive gas is already priced in and the price shock is more moderate. Also, the economy and consumers are already prepared for expensive energy, because they have made different investments (i.e. they already had to think of efficiency).

On average, I would say, oil price increases suck much more for US citizens than Europeans. That’s why the US is willing to fight for oil and most European nations aren’t. It ultimately does suck for everyone, though. (Except the producers on this side of the Straight, course)

I was watching a video (I think it was Not Just Bikes) which indicated France started focusing on nuclear after the oil crisis in the 1970s.

The video also made the point that first crisis was also triggered by Israel’s behaviour in the region. So a case of history repeating itself?

 

[RickRoyLeonPrisZhoraRacha]

IIRC, back when I was too young to drive, and the gas crisis was in full swing, there was rumors of a pipeline from Alaska. This was to bring oil from the rich oil fields and rigs to the US. Turns out, once it was completed, the oil was mostly exported to Japan and Asia. Yet, our gas prices never went down or up as high until a crisis like a war.
Then, on the eastcoast..you know, those fans of The Sopranos who watch the opening credits to see the fuel storage off the NJTP, the smell of north Jersey was acrid. The refineries just around Newark were full steam ahead. Those refineries are nothing anymore, thanks to EPA and the pollution regulations. And for new refineries to be built, the regulations that we need to stay in place, are under attack by the oil conglomerates. Why spend more to make cleaner produced fuels when you can cut corners and leave it to the next generation to clean up, die over. So most of the east coast refining was abandoned or shutting down. Not for need, but for greed. Now Texas has the main refineries, aka eggs in one basket, and it pipelines to east, central and west. California shut down its refineries and thus, prices are more to transport the fuels.
The US gets about 8-9% of its crude from Persian Gulf states. But it exports more than that to EU, South America and Asia.

Trump fucked, raped, disgraced, grifted, deceived, and bankrupted this country and the world, like he raped women and destroyed businesses; and his family will continue doing this long after he's gone. Which I hope today's college grads take law school, politics and make laws to ban his name forever. And sue the Drumpf/Trump families till they have only worthless pennies to their name!

 

[Hilarius]

It's unfortunate, but really nobody could have seen this outcome ahead of time. The mysteries of oil prices are vast and ineffable. Supply, demand, who knows what that's about? Mere mortals cannot hope to comprehend such an esoteric and completely alien set of Lovecraftian cosmic forces, forces beyond our ken. These outcomes, as with all negative outcomes of our actions, are completely opaque to foresight and planning. Nothing could have been done to avoid this fate. The only certainty is that the Democrats are to blame.

</S>

One of my clients is a financial firm, and they have a TV in the lobby that plays CNBC all day. I was in the office one day, shortly after the war began, and, no joke, the segment that was on was about, “The Trump Administration didn’t realize that attacking Iran would increase gas prices”. They were interviewing all these people talking about how the administration genuinely didn’t realize gas prices would go up, and how they were now scrambling to mitigate the issue.

 

[DrewW]

Your tirade works for pretty much every country.

America isn't that special

Citation needed.

Zuckerberg described Twitter as a clown car that drove into a gold mine. The USA is in a similar situation. We have a unique abundance of natural resources. We have unique, defensibly isolated geography and, until recently, the most human talent of any nation on Earth. In almost every way you could measure it we are special. Even our current political disaster is unlike anything in the modern world and only rivaled by some of the most corrupt popes or mentally ill roman emperors.

trump was only able to cause so much damage because we were so special. But two administrations replacing DEI hires with DUI hires has been kryptonite to our special powers. Or trump has become an angry Bizzaro using our special powers to wreck the world because he doesn’t understand it.

 

[evanTO]

Despite being "energy independent" the US is not actually setup to use the "energy" it produces.

Most US refineries were built in the age of Middle East oil, which has a thicker consistency than the stuff drilled out of the ground in the US, and so they cannot refine the US sourced oil.

WOMP WOMP!

 

[LordEOD]

It is known form those that stand behind the POTUS that when he shouts "drill, baby, drill!" and the people cheer - they're cheering for their own increase fuel costs, enslavement to the fuel pumps, damage to their environment and catastrophic damage to the environment in which their children must reside. All of that on top of that those cheering will not only be on the losing end of it all, but will pay for the privilege.

Is it any wonder that they consider their constituency as stupid and work hard to keep them there?

They must indeed laugh all the way to the bank.

 

[Bravesirrobinson]

“The clean energy transition has not eliminated geopolitical risk,” wrote Jason Bordoff of Columbia University and Meghan L. O’Sullivan of Harvard University in Foreign Affairs this week. “It has layered new vulnerabilities atop old ones.”

Yeah that's kinda bullshit. You buy a solar panel once and it continues producing electricity for decades. You buy a barrel of oil and it produces power exactly once. The US been fighting over oil production in the Middle East since the 50s, with no end in sight.

 

[sciccoso]

From what I'm reading here, it seems if there was an actual reason for starting this war (dubious, but hear me out), it was to make American oil exports more attractive, thereby enriching American legacy fossil fuel companies. Bonus, it punishes California.

Mr. President is not trying too hard to deny that: https://www.reuters.com/business/en...s-heading-us-load-up-with-oil-gas-2026-04-11/

 

[Zoc]

That the US refineries aren't equipped to handle the "sweeter" US oil is a point that has come before. I guess that re‑equipping them would be just too costly, and borne by the American consumers anyway in the end.

Worth keeping in mind that a lot of that "sour" crude comes from Canada, and we (Canada) don't sell it to anyone else. Obviously that still doesn't mean that North American is isolated from the global market.

 

[mrswiftpaw]

The United States achieved energy independence when Obama was president. It just happened quietly. It is true that the Trump administrations, stretched across many years, have attempted to erode it.