Piecemeal price cuts won’t solve the Iran war’s effects on inflation.
At this year’s annual meeting of the World Economic Forum, Donald Trump told a room full of the world’s most prominent CEOs about a routine that he performs when he meets a successful businessperson:
I said, “You’ve doubled your net worth since I’ve been president, right?”
This is how Trump has long pitched himself—as the savior of American commerce. One of his central promises to voters in 2024 was that he would encourage private investment in the United States, boosting the stock market and ushering in a “golden age” of economic activity. Everyone, he vowed, would be making money.
But the president now seems less pro-business than he once did. On Monday, in response to a question about the gargantuan profits being posted by U.S. oil companies, Trump told reporters that ExxonMobil and Chevron are “making too much money based on a shortage.” Energy companies adjust their prices as global markets move; when Trump took the country to war against Iran, in February, the world’s oil supply was abruptly pinched, and prices shot up. Chevron and ExxonMobil announced that they’d earned $12.1 billion and $14.5 billion, respectively, last quarter—many billions more than they’d made during the same period last year. “They ought to give some of that back to the public, and they better cut the retail price, the consumer price,” Trump said.
This statement echoes the president’s previous accusation of price gouging in the industry. Back in June, after the U.S. and Iran signed a memorandum of understanding, Trump claimed that companies were keeping gas prices from falling as quickly as oil prices were. There are legitimate economic reasons that gas prices and oil prices aren’t always perfectly synced, and Big Oil doesn’t unilaterally set retail gas prices at American pumps (fewer than 5 percent of U.S. gas stations are owned directly by major oil companies, according to the American Petroleum Institute). The Department of Justice and the Federal Trade Commission subsequently called for states to investigate possible retail-price manipulation. To shift some of the responsibility for high gas prices, the president is now scolding an industry he once championed—but it won’t change the reality that most Americans are unhappy with the economy, and that Trump is largely to blame.
Oil interests reportedly spent more than $75 million to get Trump reelected, and the administration has consistently supported the industry over the past two years. “Drill, baby, drill” has been a mantra for his administration since day one. The White House recently revoked protections for endangered species, clearing the way for companies to drill in critical wildlife habitats. The secretary of the interior, Doug Burgum, has pushed to increase offshore drilling and drilling on public lands. Trump’s suggestion that Big Oil return some of its money “to the public” represents, by his own admission, a hard pivot. “I should be the last one to say it, because I’m a big free-enterprise guy—nobody bigger,” he said on Monday. (ExxonMobil declined to comment for this story, Chevron didn’t respond to my request, and the White House told me that “President Trump’s priority has always been and continues to be lowering gas prices for American families.”)
Trump and his party have every reason to be worried about high prices. All kinds of consumer goods have become more expensive since the start of the Iran war, and Americans are now broadly worried about the cost of living, just as they were before Trump took office. People’s dissatisfaction with the president’s handling of the economy is reflected in his abysmal approval ratings, which pose a problem for Republicans in the midterms. Trump’s strategy has so far been to avoid taking responsibility for any Iran-driven inflation and to insist that, actually, the U.S. is experiencing an economic boom. He’s right that some indicators have lately been positive: The stock market continues to set record highs, and inflation did cool in June after three straight months of acceleration—although it’s still higher than it was before the start of the war.
With his comments on Big Oil, the president seems to be acknowledging that high prices are indeed a problem for many Americans. He also seems to expect that private companies will bail him out during a moment of political weakness. This administration has created the conditions—both domestically and abroad—for consumer goods to become more expensive, and for the cost of oil to jump. No piecemeal discount can undo what Trump himself has already done.