Former President Donald Trump Jr. speaks to the press after attending wake for NYPD officer Jonathan Diller at Massapequa Funeral Home in Massapequa Park, NY on March 28, 2024, Image via Shutterstock.
Nobel Prize-winning economist Paul Krugman made it clear that President Donald Trump's new scheme to reduce diesel prices will have no impact, that is, assuming it gets off the ground at all.
Writing Monday, Krugman made it clear, "He’s not allowed to do this: Sanctions preventing purchase of Russian oil are law, not a choice on Trump’s part. But under Trump, laws are suggestions at most, so it might happen anyway."
He went on to cite a recent piece from Professor Phillips O’Brien saying that Trump doesn't appear to even care about hiding his support for Russian President Vladimir Putin and his ongoing war against Ukraine.
The larger problem that Trump faces, Krugman explained, is that Trump said he was bringing in "300,000 tons" of oil for Americans.
"That’s a bit over 2 million barrels," said Krugman. "America consumes approximately 4 million barrels of distillates — diesel (mostly) and heating oil — every day."
From the early days of the Iran war, Trump has claimed that the war would end shortly, within weeks, then within another few weeks. Each comment helped encourage the energy market and some of his statements have helped push down fuel costs temporarily. Using this tactic only works for so long, however.
Repeatedly promising an end to the war and a deal on high oil prices, announcing them several times a month. Thus far, the war has raged on.
But Trump’s words have not merely lowered oil prices; he's raised them with his rants too. After his April 1 threat to send Iran “back to the stone ages,” prices surged, eventually closing more than 7 percent higher above $109 a barrel. Bloomberg News found that markets have since become less responsive to Trump's rhetoric and more focused on physical supplies and cargo movements.
It prompted Krugman to question, "So Trump is betraying an embattled democracy, demonstrating our faithlessness to the whole world, seriously damaging whatever is left of America’s leadership in the world, for the sake of maybe 12 hours’ worth of diesel. Really?"
He thinks that no one at the White House actually did the math on what 300,000 barrels of oil works out to.
"They had no idea that it was trivial for an economy the size of America’s," wrote Krugman. "I might add that this is [a] general issue with Trump: he often touts trivial policies as major achievements, and it often seems obvious that he has no idea how big America and the world are. Arithmetic, I guess, suffers from Trump derangement syndrome."
As other economists have explained, the "tiny deal" is so small that it isn't likely to have any impact at all.
"According to the International Energy Agency, the world consumes 855 million barrels of diesel per month, or just under 115 million metric tons. That means the 300,000 tons for the month of October would be enough diesel for about 11 minutes a day of consumption. To put it another way, it would represent about 5 percent of what the U.S. exports daily," calculated Yahoo Finance.
Meanwhile, America's northern neighbor, Canada, has a diesel surplus. Normally, it would send the diesel to American refineries, and the U.S. could get its oil from a closer supplier rather than shipping it from Russia.
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