Commentary: The White House’s oil-restraint toolbox is empty

WHAT CAN THE WHITE HOUSE DO?

My working assumption is that the oil market will add US$3 to US$6 a barrel to the headline price for every day – every single day – that the war continues. Monday to Friday, that’s US$15 to US$30. 

It’s bearable for another week, perhaps two, but any longer and the world will start to incur serious economic damage through soaring energy costs. Short of a very risky – and possibly illegal – intervention in the oil futures market, the White House doesn’t have more meaningful tools to wield to bring energy prices down.

Do I believe the Trump administration is seriously thinking about interfering with the futures market? You bet. Even the Biden administration considered it in 2022 after Russia invaded Ukraine, before realising it was too hazardous and unlikely to succeed.

The White House has already thrown everything it can at the problem. Sure, it can ask Congress to scrap federal fuel taxes, as Biden did in 2022. But that would take time – and may ultimately not win sufficient votes. US states, particularly those under Republican control, may also announce their own fuel-tax holidays, as some Democratic states did three years ago. Trump can waive some environmental rules for gasoline and diesel too. 

All those measures would buy time at home – but internationally, the damage from rising oil prices would continue. The White House, cornered, may try another tool: an export ban on US oil and refined products. That would certainly crash domestic prices, but send global ones soaring. It would be a tremendous mistake.