The Power Of The Tweet

President Trump is proving once again the power of the tweet. Oil prices that were on the rise because of economic optimism surrounding U.S. China trade talks and OPEC production cuts, not to mention the rising tensions in Venezuela, got slammed after President Trump decided to tweet about oil. “Oil prices getting too high. OPEC, please relax and take it easy. The world cannot take a price hike - fragile!”

The Tweet immediately caused oil and products to retreat as the market remembers how the President got OPEC to do his bidding in the past, but it is the President that should really chill out because it is unlikely that OPEC would listen to him. OPEC and U.S. oil producers are still trying to recover from that last tweet engineered oil price crash that not only brought down oil but the whole stock market along with it. By granting waivers to Iran’s oil buyers, it caught not only OPEC producers by surprise, but it also caught U.S. shale producers off guard. This time OPEC will not listen to the tweet, even if the President signs the No Oil Producing and Exporting Cartels Act, commonly known as NOPEC.

The catalyst for the tweet was the rising cost of gasoline. The Lundberg Survey has risen 10 cents per gallon in the last 2 weeks. The current average at the pump is $2.395 per gallon as tracked by AAA. The President worried about rising gas prices and its impact on the consumers may be short sighted because these sharp price drops are taking its toll on U.S. producers as well.

One producer emailed me about the President’s tweet saying “In addition to the trouble it causes shale producers, it is also very difficult for little “stripper well” companies across the middle of the country. We are struggling to maintain employees, service debt, and have anything left over for capital expenditures in order to maintain our production levels.“

Oh, sure the U.S. is the world’s largest oil producer but getting to the top is one thing, staying there is another. The U.S. energy industry achieved a historic milestone by raising U.S. oil production to a record breaking 12 million barrels of oil per day, cementing our spot as the world’s biggest oil producer. The reason of course is no longer a secret. The U.S. energy industry transformed the world with innovations on fracking, combining it with directional drilling and are now making history. Instead of being held hostage to foreign countries for oil, we are now the biggest producer in the world improving not only our economy but our national security as well. Fears of the U.S. running out of oil are gone and now we are talking about being self-sufficient. This upset what was before fracking, the world oil order OPEC who in response to the increasing shale threat, tried to pump U.S. shale out of business back in 2014 but failed and now the U.S. continues to change the energy world. Yet while the upside on U.S. oil production seems almost unlimited; to keep that trajectory of rising oil production we will have to work harder as legacy production decline rates are accelerating at a quickening pace.

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Gary Anderson 3 weeks ago Contributor's comment

Interesting article. Trump makes consumers happy. Interesting that Trump days the economy is fragile. I thought the tax cuts were for strengthening the economy, but apparently not. This is why Trump will settle with China without a win.