How does the oil price crisis affect Trump's election?

Mohammed Al-Minshawi-Washington

Developments related to energy markets are accelerating dramatically around the clock, and oil prices have increased by 30% following a Twitter Tweet by President Donald Trump in which he stated that he had spoken to the Saudi crown prince who had spoken with the Russian President, and Trump had expressed his hope to reduce production by ten million barrels Per day and maybe more, which would be very good for the oil and gas industry.

"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," the famous economist Mohammed Al-Arian commented on Trump's tweet.

Trump's tweet came at a time when he met with representatives of American energy companies, who were negatively affected by the production war and the low prices that have hit the global oil and gas industry in recent weeks and days.

And participated in the meeting, some representatives of major American companies such as Exxon Mobil and Chevron, in addition to companies producing shale oil, which has expanded 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 Corona virus, which coincided with the start of Saudi Arabia and Russia in flooding the market with oil, which pushed its price to twenty dollars per barrel.

All policies are local
Few states are the winners of President Donald Trump in the 2016 elections, and some of these states have huge negative economic impacts as a result of the spread of the emerging Corona virus.

This coincided with an unprecedented decline in global oil prices, which has a significant impact on the shale oil industry that has spread to many of the United States over the past decade and has contributed to changing the global energy map.

Pennsylvania is one of the most negatively affected states due to the drop in oil prices. It has witnessed a 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 the related services according to the data of the Bureau of Labor Statistics.

And during his participation in a state electoral conference last October, Trump said, "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 this industry, while Democratic rival Joe Biden does not know this enthusiasm, due to considerations related to environmental and climate change issues that have an important place on the Democrats' agenda.

The state of Pennsylvania has 20 votes among the members of the electoral college from the swing states, Trump won 48.1% of the votes of her constituents, while Democratic competition Hillary Clinton won 47.6% of the votes and Trump won by forty thousand votes only.

The price war between Saudi Arabia and Russia prompted the shale oil companies to follow strict austerity measures with which the workers lost a large part of their salaries, thousands of them were dispensed, and thousands of others are expected to be dispensed if the decline in oil prices continues.

The drop in oil prices harms the possibility of survival of the shale oil industry, whose cost of extraction is three to four times the cost of extracting oil by conventional methods.

Some 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 president ally Trump 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, and the number has reached more than 10 million applications in the past two weeks.

Low oil does not benefit consumers
At the US President's daily press conference on the Corona Virus, Trump a few days ago addressed US citizens by saying that what is happening is "good for consumers and gasoline prices will go down."

The average price per gallon reached $ 1.9, and next week is expected to reach $ 1.75, which has not happened for years.

But with the majority of Americans remaining indoors due to the health embargo imposed by the spread of the Coronavirus, they do not feel the value of lower petrol prices, as no one drives his car in these circumstances.

And the American airlines do not benefit from this decrease either, as most of the American flights 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 the "OPEC Plus" negotiations to reduce production, which resulted in Saudi Arabia increasing production pumping to reach 13 million barrels per day within weeks after it reached only 9.8 million barrels per day in February. .