Trickle Down: Finally Here

Ronald Reagan famously told us that benefits from cutting taxes on the rich and on wealthy corporations would eventually “trickle down” and help us all. When put into action, we saw a wealth accumulation at the top, no significant job creation for the working class, and surging national debt. In essence, “the rich get rich and the poor get poorer; ain’t we got fun.” The trickle that finally arrived was a foul-smelling amber liquid we were told was rain.

Now we have a new trickle-down event, only this time it is oil and gas that has been shut to a trickle by a president who just, “doesn’t care.” He told us so. The self-declared master of the deal can’t deal his way out of a war he started. The repercussions of shutting off 20% of the world’s oil supply means whatever trickles through will be priced according to those pesky laws of supply and demand.

Donald Trump told the uninformed MAGA faithful that the U.S. was a net exporter of oil so this war wouldn’t impact our gas prices. I don’t know if he is really that stupid and believed what he was shoveling or he was just lying again. With this president it is hard to tell the difference between stupid and lies. They look so similar. If he were honest and not stupid, he would have said that oil is traded on the global market and oil companies sell to the highest bidder. In addition to that, many U.S. refineries are optimized for heavy crude and not the light sweet crude we produce.

A Republican friend who lives in Florida recently rejoiced and posted a picture of her gas pump with a $3.499 price for 87 octane. One other person chimed in and said he found gas in Mississippi for $3.46. Most others stated prices closer to the national average of $4.26. I made my comment to her post, with my predictions based on experts in the oil industry. It was not a pretty picture.

In recent pronouncements from energy majors ExxonMobil and Chevron, they warned that both physical crude and refined product stockpiles are now at historic lows. Once these supplies are exhausted, Brent crude could hit $150-$160 per barrel. At that price we can expect to pay $6.50-$7.00 per gallon. That would be the national average with Californians paying up to $9.00 per gallon. Exxon and Chevron may just be doing a little pre-emptive CYA knowing that they will be making obscene amounts of money at our expense.

Even if you are like me and only fill up once every month and a half, your wallet will be hit in other areas. Grocery prices are impacted by higher petroleum-based fertilizer prices and the diesel used in farming. Jet fuel surcharges will raise transportation costs, and will also raise airline ticket prices, shipping fees, and delivery service prices. Housing costs will rise due to higher asphalt, roof shingle, PCV pipe, and insulation price spikes. Aviation surcharges will cut into travel and the leisure industry will suffer. Yes, the ripple effect will be with us for some time.

If the war ended today, oil prices would drop almost immediately, but gas prices would take six months to one year to recover to pre-war levels. It will take up to three months just to clear the current traffic jam in the Gulf. Restarting damaged production will take 3-7 months. Add to this dire prediction the fact that our national “dealmaker” is more concerned with his golden ballroom, his UFC fighting cage on the White House lawn, his Freedom Arch, his golden statues, his monuments to his own greatness, bringing continued retribution to his perceived enemies, and maintaining his personal financial siphon hose filling his coffers, and this war isn’t ending tomorrow.

The Art of the Deal in this instance looks more like a 3rd-grader’s attempt at a Jackson Pollock than any true artistic endeavor. He has been tinkling on the American public and telling them that it is raining for years. Now with oil supplies slowed to a trickle and gas prices approaching all time highs, we can rest assured knowing that the solution lies with a man who ramble-tweets throughout the night, sleeps through staff meetings, and can tell the difference between an elephant, a rhinoceros, and a camel on a dementia screening test. I feel better already, but then again, I’m on my second scotch.