Summary of Key Points
With less than 100 days left until the U.S. midterms, high oil prices have caused Trump's poll numbers to drop to a new low. To appease voters, Trump has publicly criticized oil companies such as Chevron and ExxonMobil for "making too much money" and demanded that they lower retail prices. The oil industry, however, argues that high oil prices are due to global supply and demand issues as well as geopolitical factors (such as the uncertainty surrounding the Strait of Hormuz), and that these companies are not to blame. Trump is attempting to pressure oil prices through rhetoric and by releasing strategic oil reserves, but his credibility is in doubt due to his inconsistent stance (sometimes escalating conflicts, sometimes suggesting a resolution). The market expects him to make concessions on the Strait of Hormuz issue to alleviate the pressure of high oil prices.
I. Midterm Elections Are Urging Trump to Use Oil Companies as a "Scapegoat"
The midterms are Trump's top priority at the moment—there are less than 100 days until the vote, and persistently high oil prices hit a sore spot for voters (high costs for driving and daily travel). Republican poll experts say that Labor Day in September is a critical moment: it is the last major holiday for travel this summer, and the level of oil prices will shape voters' perceptions of "living costs," which will directly affect their voting decisions.
Trump's support rates have hit rock bottom, so he needs to find a "scapegoat" to distract from his problems. Oil companies have conveniently become that target: with their high profits, ordinary voters are angry that they do not lower prices despite the situation. Even though Trump claims to be the greatest supporter of free enterprise, he cannot help but criticize them for "making too much money" and threatens to force them to reduce prices—essentially using his stance against large corporations to win votes for the Republican Party.
He has also criticized the CEO of Chevron for not thanking the government, saying, "Without our policies, you would be gone (for example, making huge profits from Venezuela)," which is a way for him to portray himself as helping the people and making voters believe that the government has supported the oil companies and it's time for them to repay the public.
II. The Oil Industry Denies Responsibility: High Oil Prices Are Not Our Fault
In response to Trump's accusations, the American Petroleum Institute (API) immediately defended itself, stating that high oil prices are caused by global supply and demand tensions as well as the instability of the Strait of Hormuz, and that individual companies are not at fault.
This makes sense: global oil demand is recovering, but supply has not kept up (for example, due to OPEC+ production cuts); moreover, the Strait of Hormuz is a vital route for oil transportation (about one-fifth of the world's oil passes through there), and the conflict between Iran and the United States has raised concerns about potential blockages, which has pushed up prices. Oil companies are selling oil at market prices, and their high profits are a result of the broader economic environment, not intentional price gouging.
In short, oil companies have simply profited from the situation, and the blame cannot be entirely placed on them.
III. Trump's Approaches to Lower Oil Prices: Rhetoric and Reserves, but Doubts About Their Effectiveness
Trump has two methods to try and lower oil prices, both of which are questionable:
1. Rhetorical Pressure: He criticizes oil companies to lower prices. However, a former White House advisor says that Trump's statements are too inconsistent (sometimes threatening conflict, sometimes suggesting resolution), and the market no longer believes him—his credibility has been severely damaged. For example, he once said that oil prices would drop once Iran was dealt with, but since the conflict persists and prices have not gone down, people have become indifferent to his words.
2. Releasing Strategic Oil Reserves: Nearly 3 million barrels were released last week, reducing reserves to their lowest level since 1983. This move can increase market supply in the short term, but reserves are meant for emergencies and cannot be depleted indefinitely; moreover, such a small amount of oil release is a drop in the bucket compared to the global market.
Experts also point out that Trump's influence has not completely diminished, but it's uncertain when its effects will wear off—meaning that his rhetoric might still cause short-term price fluctuations, but in the long run, it is unlikely to be effective.
IV. Market Expectations: Will Trump Make Concessions on the Strait of Hormuz?
The market is watching Trump's next move closely. Researcher Johnston suggests that people expect him to make a symbolic concession on the Strait of Hormuz issue, such as reaching an agreement with Iran to ensure the safety of the shipping route.
Why? The uncertainty surrounding the Strait of Hormuz is a key factor driving up oil prices. If the route becomes stable and oil transportation is secured, supply will be guaranteed, and prices should drop. Trump has also hinted that it might be necessary to reopen the Strait of Hormuz, and under the pressure of the midterms, he could possibly make concessions on this issue.
In essence, the market does not believe that criticizing oil companies will lower prices; they trust that he can resolve geopolitical issues, which are the real root causes of high oil prices.
V. A Repeat of History? Biden Also Criticized Oil Companies
Interestingly, former President Biden did something similar during his tenure: when inflation was high, he criticized oil companies for "exorbitant profits." This shows that regardless of the party in power, whenever oil prices are high and voters are dissatisfied, oil companies become a target—this not only distracts from public dissatisfaction with the government but also makes the politician appear to be speaking on behalf of the people.
However, the core issues behind high oil prices are still supply and demand as well as geopolitics. Criticizing companies is more of a superficial tactic. Trump's current actions are primarily for political gain during the midterms, rather than a genuine solution to the problem of high oil prices.
In Conclusion: Trump's criticism of oil companies is a "political performance" ahead of the midterms; the oil industry's defense of its innocence is factual; the key to lowering oil prices lies in whether Trump can resolve the conflicts surrounding the Strait of Hormuz. For ordinary voters, whether prices will drop ultimately depends on the outcome of geopolitical developments, not on the president's rhetoric.