Trump isn’t the first president to criticize OPEC for prices being too low. The last time the U.S. so publicly begged the alliance to scale down output was April 1986, when Ronald Reagan was spooked by plummeting prices hurting oil producers in Alaska and Texas. He dispatched then-Vice President George H.W. Bush to Saudi Arabia.
In comments similar to Trump’s today, Bush told the late King Fahd that the U.S. is interested in “cheap energy,” according to contemporaneous press reports. Yet he also cast cheap crude as a double-edged sword for America, stressing that “a viable domestic oil industry is in the national security interests of the United States,” recalled Bob McNally, founder of oil consultant Rapidan Energy Group, in his book “Crude Volatility.”
Bush’s mission was not an immediate success. Although Bush and King Fahd agreed the world needed stable oil prices, they did not agree on how to achieve them. And Saudi oil production continued to rise for at least four more months. OPEC countries ultimately agreed to cut output and abide by quotas by December 1986, eight months after Bush’s visit.
Now Trump is in a similar position, as he exhorts Russian President Vladimir Putin and Saudi Crown Prince Mohammed Bin Salman to slash production by at least 10 million barrels a day, despite having blasted OPEC in the past as a “monopoly” that is “robbing our country blind” and having long celebrated low gasoline prices as a “tax cut” on American consumers.
“It’s a remarkable change,” said Jason Bordoff, a White House energy adviser during the Obama administration. “The American political consciousness has been shaped by half-a-century of worry about high prices and foreign oil.”
Not everyone, though, is happy with Trump’s shift. “We’ve seen every president declare that we are energy independent and then we find ourselves pleading with the Saudis and Russians,” said Robbie Diamond, head of Securing America’s Future Energy, a group that argues for a greater variety of transportation fuels and more transparent oil markets.
“If we were energy dominant,” he said, “we would not be groveling to these countries to cut production.”
This article was provided by Bloomberg News.