What About an Export Tariff on Oil?

 

President Donald Trump has become the Tariff King by imposing import tariffs on everything from steel and lumber to dog leashes and soccer balls. Yes, 70% of the world's soccer balls are manufactured in Sialkot, Pakistan, and they were initially going to be hit with a 29% tariff. Then the president lowered that to 19%. Maybe that’s why he got the first ever FIFA Peace Prize. But I digress; I seem to do that a lot.

Those are all import tariffs designed to keep domestic production competitive. Import tariffs cause prices to go up on those cheaper imports and the more expensive domestic items like KILLSPENCER soccer balls made in L.A., can now be sold with a 19% price advantage. If you would like one of their soccer balls, they go for $575. SCORE!

What about oil? The U.S. is a net exporter of oil and natural gas, but since oil is priced on the global market, American consumers must pay higher prices when something happens to global pricing that causes that commodity price to go up. Things like an ill-timed war near a major global oil supply, for instance. Global oil prices go up, then domestic producers take advantage of that crisis and raise gas prices within seconds of the first bomb dropping in the Middle East. Local oil producers are currently getting a windfall estimated at $5 billion each month. Rystad Energy analysts predict, with oil now at $100+ per barrel, domestic oil producers could see an additional $63 billion in profits. War = Ka-ching.

Other countries use export tariffs to control domestic pricing. China uses export tariffs on specific resource products like rare earths to preserve resources and support domestic markets. What if the U.S. placed an export tariff on oil to lessen the impact of global oil price fluctuations? This would have the reverse effect of import tariffs, that raise domestic prices, by lowering prices at the pump. You would think a simple $40 per barrel export tariff on oil would bring that $100+ per barrel cost back to what it was in December of 2025. Gas prices should then return to “normal” whatever that is.

The main stumbling block to this export tariff plan is that it would be illegal. Yes, export tariffs are unconstitutional as per Article 1, Section 9, Clause 5 of the Constitution. Of course, the U.S. Constitution has never gotten in the way of this president who seems to break out the matches when some pesky law gets in his way. He could use his favorite “national emergency” card. Or, like other legal roadblocks he could just rename the tariff to be a “user fee.” You know, like calling a war an excursion.

The other stumbling block is the fact that oil and gas companies directly contributed $75 million to Donald Trump in 2024, with some estimates of PAC monies and lobbying efforts exceeding the $400 million mark. Oil executives were asked to even come up with $1 billion in exchange for rolling back environmental regulations. Of course that effort has nothing to do with the fact that today’s news included an article with that same figure. It seems that the Trump administration will pay $1 billion to a French company to walk away from two U.S. offshore wind leases as the administration ramps up its campaign against offshore wind and other renewable energy.

Since other countries use export tariffs or duties to control prices of their precious commodities, I wondered why I don’t see such a tariff among the possibilities. I therefore posed the question to my AI engine of choice, Google, “Would a US export tariff on oil reduce domestic gas prices?” A summary of their response was basically that “it’s complicated” and “don’t go there.”

I was a bit confused with this reply until I noticed that they based this response on information provided by the Federal Reserve Bank of Dallas. Tx, and the American Exploration & Production Company. While I normally trust anything with the name Dallas, I seem to remember that the Texas economy relies on oil and they are already running out of champaign celebrating their current windfall.

Sifting through the gobbledygook, it seems that American wells have something called light sweet crude from shale, but we built our expensive refineries decades ago when we imported cheaper mostly heavy sour crude from Venezuela, Mexico, and Canada.

So, who could have seen this coming? Oil companies are selling our high demand expensive light sweet crude to an international market geared to refine the good stuff, while domestic oil refineries have placed us reliant on international markets for heavy sour crude because they failed to upgrade their infrastructure.

Up jumps a president who starts a war that places the stuff we refine for gas at a premium and those same oil refiners know we will have to pay whatever they say. That’s the same president who hates clean energy, except when it happens to be a Tesla made by his favorite billionaire buddy. No wonder they can afford to send PAC money to their favorite oil-friendly politician.

So far, I haven’t seen much of an impact. I filled my tank before we went on our “Iran excursion” and my gauge still reads over ¾. I will still need to buy expensive gas in the future. My 2017 Honda Pilot has only 13,000 miles on it so I shouldn’t care much. I do feel sorry for those who must bear the burden of the whims of an erratic and emotional president.