Illustration: Eniola Odetunde/Axios

President Trump is working to help an oil industry imploding as the coronavirus crisis chokes demand, but listen closely and you’ll hear his enduring love for cheap prices.

Why it matters: He’s like most Americans, who worry about energy only when it’s expensive or gone. As president, Trump has been slow and uneven in responding to the sector’s turmoil because of his inclination to cheer rock-bottom prices.

The big picture: Trump often says — wrongly — that the oil industry was doing great before the pandemic. Companies have been producing more oil and gas than ever, which empowered Trump’s tagline of “energy dominance.” But all of that supply is actually a core reason many were already struggling before the coronavirus hit.

How it works: Here’s a representative timeline of Trump’s evolving comments on oil over the past month.

  • On March 9, right at the beginning of the cascading shutdowns across the country, Trump tweeted that it was good for consumers that gasoline prices were going down.
  • On March 12, Trump told reporters about oil prices dropping, per Bloomberg: “Frankly that’s like a big tax cut, not a little tax cut for the consumer. So there’s something about that that I like.”
  • On March 19, Trump said for the first time that he would, at the “appropriate time,” get involved in a price war between mega-producers Saudi Arabia and Russia. That price war began March 6, almost two weeks prior.
  • By March 26, Trump administration officials had ramped up their diplomatic overtures to Saudi Arabia.
  • On March 30, Trump surprised even himself. “I never thought I would be saying this: Maybe we have to have an oil increase,” Trump said in a Fox News interview. “Because we do. The price is so low now. We don’t want to have an industry that’s wiped out.”
  • Trump tweeted Thursday that he called the leaders of Saudi Arabia and Russia, fully engaging himself in the saga, at least for the moment.
  • On Friday, Trump again emphasized cheap prices and indicated a reluctance to take major action. He suggested his administration find even more places to store excess oil than the nation’s strategic reserves. “At these prices, you should do it,” Trump said. “Fill it up, right?”

The intrigue: "Up until recently, he has had very little sympathy for oil companies," said one person familiar with Trump's thinking who requested anonymity to talk candidly about the president's sentiment. "He approaches this issue as a true populist, up until this crisis."

Reality check: Storing more oil and most other options Trump has at his disposal are limited, and the industry is divided on what the government should do. Turmoil, both in the short and long term, is all but guaranteed for the embroiled sector.

In the short term, expect bankruptcies and layoffs.

  • The industry and related sectors account for about 2.5 million jobs, according to IHS Markit, a consultancy.
  • Oil prices persisting in the range of $30 a barrel could prompt 150–200 Chapter 11 filings in the sector through 2021, according to research published Friday by consultancy Rystad Energy. If prices fall closer to $20 a barrel, that number could rise to 400.

In the long term, experts are warning that oil prices — and therefore gasoline prices — will rise more in the coming years than they would have absent the pandemic due to how classic boom and bust cycles work.

  • The demand cutoff — roughly a quarter of the nearly 100 million barrels a day that are consumed now — will eventually prompt the industry to curtail production so much that in a few years’ time the world could be in a supply crunch, not a demand crunch.
  • "Paradoxically, this [demand cutoff] will ultimately create an inflationary oil supply shock of historic proportions because so much oil production will be forced to be shut-in,” Goldman Sachs wrote in a note last week.
  • “Unless there's some structural break when we emerge, a thirstier world is going to run into larger shortages," and oil prices will go through the roof, said Bob McNally, founder of consultancy Rapidan Energy.
  • The firm forecasts that oil prices could breach the $100-per-barrel mark by the mid-2020s — light-years from now in our current time frames. That could mean $4 per gallon gasoline.

Yes, but: Despite tanking stocks and oil prices, the oil and gas industry is enjoying a record high positive reception from the public, according to Gallup data going back to 2001.

  • For the first time since Gallup began asking the question, the industry received a net positive rating in August 2019, with 39% of respondents rating the sector positive and 36% rating it negative.
  • The probable reason why is the same reason Trump likes the sector: low gasoline prices.

The bottom line: The irony, of course, is that right now, most of us can't take advantage of these rock-bottom prices as we're locked down. When we can drive and fly again like normal, prices are poised to rise.

Go deeper

Amy Coney Barrett sworn in as Supreme Court justice

Amy Coney Barrett took the constitutional oath to serve as a Supreme Court justice at a White House ceremony Monday night, not long after the Senate voted to confirm her nomination to the high court in a 52-48 vote.

The state of play: Justice Clarence Thomas administered the oath. The Supreme Court wrote in a statement that Barrett will take the judicial oath on Tuesday, at which point she will be able to begin her work on the court.

Gulf Coast braces for Zeta after storm strengthens into hurricane

Hurricane Zeta's forecast path. Photo: National Hurricane Center

Louisiana Gov. John Bel Edwards (D) declared a state of emergency Monday as Zeta strengthened into a hurricane and threatened Mexico's Yucatan Peninsula as it moved towards the U.S. Gulf Coast.

The state of play: Zeta was expected to make landfall on the northern part of the Yucatan Peninsula Monday night, bringing with it a "dangerous storm surge" and "heavy rainfall" as it moved into the Gulf of Mexico, the National Hurricane Service said.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Politics: The swing states where the pandemic is raging — Pence no longer expected to attend Barrett confirmation vote after COVID exposure.
  2. Health: 13 states set single-day case records last week
  3. Business: Where stimulus is needed most.
  4. Education: The dangerous instability of school re-openings.
  5. World: Restrictions grow across Europe.
  6. Media: Fox News president and several hosts advised to quarantine.

Get Axios AM in your inbox

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Subscription failed
Thank you for subscribing!