Oil price war .. Does it affect Trump's chances of elections?

Mohammed Al-Minshawi-Washington

Energy market developments are greatly accelerating, and with it the movements of US President Donald Trump, who has held meetings with representatives of American energy companies that have been affected by falling prices as a result of the production war between Saudi Arabia and Russia, are increasing.

Oil prices rose 30% after Trump tweeted that he "spoke with Saudi Crown Prince Muhammad bin Salman, who spoke with Russian President Vladimir Putin." Trump said he hoped to cut production by ten million barrels per day, and "maybe more, which would be very good for the oil and gas industry."

Economist Mohamed Al-Arian commented on Trump's tweet, saying, "Of course, ten million barrels per day is a big number that is difficult to reach even if Russia and Saudi Arabia try to save face and reach quotas that satisfy them."

Trump's tweet came after his meeting with representatives of American energy companies who were negatively affected by the production war, and some representatives of major American companies such as Exxon Mobil and Chevron participated in the meeting, in addition to shale oil production companies that have expanded in production in many American states during the past years.

International oil prices have lost about two-thirds of their value this year in light of the almost complete stoppage of global economies due to the Corna virus, which coincided with the start of Saudi Arabia and Russia in flooding the market with oil.

Affected states
Few states are the ones that gave President Donald Trump victory in the 2016 elections, and some of these states suffer huge negative economic impacts due to the spread of the Corona virus, and due to the unprecedented decline in global oil prices, which greatly affects the shale oil industry that increased in The United States, some of which is located in these states.

Pennsylvania is one of the most negatively affected states due to the drop in oil prices. The state witnessed a large boom in the shale oil industry during the last decade, which allowed the employment of 32 thousand of its residents to work in this industry and related services, according to the data of the Bureau of Labor Statistics.

During his participation in a state electoral conference last October, Trump said to the state's citizens, "You are now richer than you were three years ago. The production of oil and gas has increased significantly compared to previous years."

Trump clearly supports the industry, unlike Democrat Joe Biden's rival, for considerations linked to environmental and climate change issues that have an important place on the Democrats' agenda.

The state of Pennsylvania, which has 20 votes among the electoral college votes, is one of the swing states, and Trump won 48.1% of its voters, just forty thousand votes from his Democratic opponent, Hillary Clinton, which won 47.6%.

The price war between Saudi Arabia and Russia has prompted strict drilling companies to follow strict austerity measures that have resulted in workers ’salaries cuts and thousands of them, and thousands of others are expected to be dispensed if the decline in oil prices continues.

Low oil prices threaten the shale oil industry, whose cost of extraction is three to four times that of conventional methods.

Experts believe that Russia wants to get the shale oil industry out of the equations of oil production and pricing, while Saudi Arabia does not want to lose its Trump ally despite its embarking on a bone-breaking war with Russia that led to a significant drop in prices.

This is accompanied by a historic increase in the number of Americans applying for unemployment benefits, which has reached more than 10 million applications in the past two weeks.

Decrease does not benefit consumers
During his daily press conference on the Corona Virus, Trump flirted with American citizens by saying that what was happening was "good for consumers, and gasoline prices will go down." The average price per gallon reached $ 1.9 and is expected to reach next week to $ 1.75, which has not been repeated for years.

However, with the majority of Americans remaining indoors due to the health embargo resulting from the spread of Corona, they do not feel the value of lower gasoline prices, as no one drives his car in these circumstances.

Nor do American airlines benefit from this decline as well, as most American airlines have stopped inside and outside the United States.

The United States imports only 530,000 barrels per day of Saudi oil, and Trump and some members of Congress have threatened to impose duties on Saudi oil imports if the policy of dumping markets continues.

Saudi Arabia and Russia are locked in a war on oil prices that entered their second month after the collapse of OPEC Plus negotiations to cut production, which resulted in Saudi Arabia increasing production pumping to 13 million barrels per day within weeks, after reaching only 9.8 million barrels per day in February. the past.