President Trump’s tweets in any given day may range from needlessly inflammatory to downright disgraceful. So when he takes to Twitter to post something as asinine as the veiled insinuation that he’s responsible for lower gas prices — “like another Tax Cut!” as he celebrated on New Year’s Day — a reasonable person ought to breathe a sigh of relief that he didn’t just fire Steven Mnuchin or announce war with North Korea.
But if you’re a business reporter from CNN, you write an article about why lower gas prices are actually bad for the economy.
“Cheap oil and gasoline prices are no longer a slam-dunk positive for the American economy. That’s because the United States is both the largest consumer and producer of oil,” writes CNN’s Matt Egan. “Yet Trump tweeted twice within the span of an hour on New Year’s Day celebrating the benefits of cheap gas.”
Egan goes on to assert that because the oil and gas industry employs around 10 million Americans, cheap gasoline harms the economy. Because Trump or a quick CNN pivot to embrace Big Oil or something.
This is pure economic nonsense. For all that Trump has tried to revive the coal industry, the market is naturally pivoting away from environmentally costly and inefficient forms of energy and power. With better research and development, electric cars have quickly become cheaper to own than regular fuel-powered cars. Considering transportation is responsible for more than a quarter of American carbon emissions, the ascendancy of less expensive electric cars — through consumer supply and demand, not regulatory overreach — is undoubtedly a good thing. (Electrical transmission contributes roughly the same amount of greenhouse gas emissions as transportation, but electricity continues to make great strides in carbon efficiency thanks to cheap natural gas.)
Lower gas prices result in much greater consumer confidence, providing both an extra boon to the economy at large and inciting higher demand for gasoline in particular. And despite CNN’s posturing, increases in gas prices have a regressive effect, disproportionately harming lower income Americans. The Brookings Institute found that for every dollar increase in gas prices, moderate and lower income families spend an additional $530 per year. Low income Americans spend nearly four times as much on gas as a percentage of their income as high-income Americans do.
All of that money Americans save from lower gas prices doesn’t linger around in checking accounts. A JP Morgan Chase study found that consumers spend roughly 80 percent of money saved from falling prices at the pump. Sure, cheap oil may be bad for the global economy, but Americans should hardly care that we’re depriving OPEC of cartel-driven cash and shrinking the economies of Russia and Saudi Arabia. And American oil output has finally surpassed those two dictatorial hellscapes for the first time since 1973. Even if we’re spending less per gallon, a far greater portion of our total oil spending goes toward the domestic industry.
All of this may not matter anyway. Gasoline price-tracker GasBuddy projects that oil could jump by 35 percent by May. In that case, pundits may need to share this article instead.
