Donald Trump, the former president of the United States, recently revealed plans to work with Republican members of Congress in order to introduce “substantial tax reductions” for oil and gas companies within their own country. This initiative will boost the domestic energy industry and lower fuel costs to consumers. Trump has also suggested that businesses be able to claim the full amount of capital expenses and new factory construction in their country.
What is the significance of lower gas prices?
Recent gas prices are on the increase. This is due to factors like seasonal refinery maintenance and rising global oil prices. Also, geopolitical uncertainties resulting from sanctions against major producers, such as Iran, have contributed. All of these factors have contributed to the concern over energy independence, and increasing consumer costs. GasBuddy or AAA Gas Price Finder are good options for accurate localized pricing. You can stay up to date on the latest prices for your favorite brands, such as Shell and ExxonMobil.
Trump’s campaign was based on his promise to lower the cost-of-living for American families. Therefore, it is important for him to keep public support. Trump’s approval ratings have been slightly decreasing in recent polls. This issue is therefore becoming more and more crucial. In swing states like Pennsylvania, Michigan and Wisconsin where automobiles are a big industry, as well as long commutes, this issue is of particular importance. In addition, many small business owners in these states depend on affordable energy for their competitiveness. The key to gaining the support of both business and individual voters is by lowering energy costs.
Key Policy Details
In a speech in Miami, former President George H.W. Bush stressed the importance of building and employing people within the United States if you want his support. Trump, while not providing any specifics about the tax breaks for oil and gas companies in the United States, has stated that these tax reductions will form part of “the largest tax cuts ever” to be made by the US. The tax cuts will include relief for workers, families and employers as well as the elimination of taxes on Social Security and tips. He stressed the benefits that Americans could get from personal finance.
Trump has also promised to boost the Strategic Petroleum Reserve. The world is powered by low-cost, abundant energy. Energy-producing countries like us are not to be blamed. He said, “We have more energy in the world than any nation and we will use it.” To achieve energy independence, he urged the use of local energy resources, such as shale gas and oil, in order to boost national security and increase energy production. He criticised restrictive policies, including those relating the Keystone Pipeline and instead wants to encourage American energy production. He also plans to streamline energy project permits and encourage offshore drilling, which will lower gas prices.
If the U.S. production of crude oil increases due to more drilling and less restrictions, this will almost definitely mean that the price of oil is reduced. Gas prices and crude oil are linked closely, so this could lead to lower gas prices. The American economy could gain an edge over countries that have higher energy costs due to lower crude oil prices. The American economy could benefit as businesses in the transportation, manufacturing and agricultural sectors see an increase in profits. Consumer spending may also rise as households enjoy savings on gas.
The potential for a reduction in the price of gas is however not guaranteed. U.S. drillers are hesitant to increase production significantly, due to concerns over current prices. Even if domestic production increases, market volatility could counteract the benefits to American consumers. Geopolitical issues like Ukraine’s evolving situation or the fluctuation in OPEC’s supply agreement can have a drastic impact on global oil price regardless of US policies.
Why gas prices are rising?
AAA reports that the average national price of a gallon regular gasoline in the U.S. is $3.165 as of Thursday morning, reflecting the recent increase. California’s average is $4.849 per gallons.
Gas prices will continue to rise. GasBuddy’s Patrick De Haan has stated that seasonal factors as well refinery problems are to blame for the rising gas prices. National average prices have risen since mid-October. They will rise between 15 and 55 cents within the next two months.
The annual maintenance cycle of spring at refineries can cause short-term outages. In recent years, the U.S. refinery capacity faced some challenges. Energy Information Administration, (EIA) reports that refining capacity dropped after 2020. Although capacity has increased in 2023-2024, it is still lower than pre-pandemic. It can lead to fluctuations in the gasoline stocks and increase pressure on gas prices across the country. Fuel efficiency strategies like properly inflated tires and more efficient driving can help consumers mitigate these negative impacts.
De Haan, an industry expert who has expressed doubts about the viability of new investment for refinery capacity, says that Trump wants to encourage refinery expansion. Financial risk and environmental factors are cited as significant obstacles to building new refineries. The strategies to boost the country’s fuel supplies will likely focus on improving the operation and output of current facilities.
Refining capacity limitations could limit the amount of crude oil that can be processed into gasoline. This would restrict supply, and keep oil and gas at high prices. Analysts also regularly examine the effects of increasing adoption of electric vehicles on gasoline demand in future and refinery capacity requirements. It is not the short-term solution to gasoline price increases, but it’s part of a larger national discussion.
De Haan expects to see a rise of between 25 and 60 cents per gallon, due to a “seasonal increase” that will peak around the 10th April. De Haan distinguishes between these price increases and the tariffs that affect oil producers such as Canada and Mexico. In order to effectively manage future oil prices, he recommends a multifaceted solution that includes strategic tariffs as well federal regulations and international collaboration.
Recent tariffs on imported goods from Canada and Mexico are expected to increase energy prices. The tariffs may offset any intended tax savings by raising production costs. This could lead to higher energy prices. Gas prices may be affected by other initiatives such as easing the regulations for gasoline containing ethanol.
Also, there are broader economic issues. Economists have warned that tax reductions could lead to inflation and erode purchasing power, potentially leading to higher prices of goods and services including gasoline. Tax cuts must be implemented with careful planning, prudent spending and economic safety measures.