Trump's promise of cheap gasoline would likely crash the economy

Donald Trump promises to cut gasoline and energy prices by more than half in his first year back in office. Experts say this promise, if implemented, would destroy the U.S. oil industry and cause a severe recession.

“Energy costs for everything, air conditioning, heating, everything, including gasoline, will go down by more than 50 percent in the first twelve months,” Trump promised again on Monday in Pennsylvania in a speech that his campaign team announced as an economic policy statement. “Your bill will be less than half.”

The problem, industry experts say, is that energy is bought and sold on a global market. The price of gasoline can only fall from the current $3.40 to $1.70 per gallon if the price of crude oil falls from $75 to $20 to $30 per barrel. At these lower prices, U.S. oil producers cannot break even.

“It would bankrupt the U.S. industry. And the entire U.S. industry would shut down before that happens,” said an oil executive with decades of experience who spoke on condition of anonymity to avoid angering Trump and his campaign team. “That's typical Trump. He speaks in an exaggerated way and without any common sense.”

The former president, who attempted a coup and is now also a convicted felon, has not given any details about how he plans to cut gasoline prices so drastically, other than his mantra of “drill, baby, drill,” which he cites as virtually the only mechanism for his entire economic policy.

When asked by HuffPost whether Trump had actually consulted with oil industry leaders before making his promise of cheap energy, his campaign team did not respond.

Energy industry insiders doubt this, saying experts have told him that his proposal is absurd.

“Such things came from politics,” said the oil manager.

Although Trump frequently boasts that gasoline was less than $2 a gallon during his presidency, he fails to mention that the national average price of regular gasoline was below that mark for only two months during the height of the Covid pandemic, when much of the economy was shut down and demand for gasoline plummeted.

“We reached this price because of circumstances that most people would not want to repeat,” said industry analyst Kevin Book.

The average price for the remainder of his term was between $2.08 and $2.90 – significantly higher than during the last two years of Democrat Barack Obama's presidency. When Trump left office two weeks after his failed coup attempt, the average price per gallon was $2.34.

Matt Randolph, another oil executive with over 30 years of experience in the industry, frequently posts videos on social media mocking politicians – both Democrats and Republicans – for their claims about energy.

In a video Randolph, which he posted last week after an earlier example of Trump's promise to cut prices in half, laughed at Trump's promise and laid out a scenario in which layoffs in the oil industry could trigger a recession. “This may be one of the dumbest statements Donald Trump has ever made,” he concluded.

In an interview with HuffPost, Randolph said the only way to achieve a price of $1.70 per gallon of regular oil is to lower the price of crude oil to $20 per barrel, and that would mean the collapse of the domestic industry.

“Oil at $20 a barrel would just destroy new production,” he said, adding that shutting down oil production would also bring down production of natural gas, which is often produced along with oil. “Natural gas prices would actually skyrocket.”

And since so many power plants now burn methane, this would lead to significantly higher electricity prices, undermining a second element of Trump's promise.

Since there is no market mechanism to reduce prices so drastically, Trump has no choice but to resort to the government. “The only other way is massive subsidies for the American consumer,” Randolph said. “And that's not going to work.”

Book, the oil analyst, agreed that he cannot imagine any possible scenario that would lead to gasoline prices of $1.70 a gallon, short of a global economic catastrophe. “This is one of those policy proposals that should be taken seriously and not taken literally.”