The Invisible Hand of President Trump. The Energy Report 05/09/2025

The oil market is starting to finally turn around as President Trump’s trade deals may start to come fast and furious. Yet it won’t always be the trade deals and tariffs that mark President Trump’s economic policy but his invisible hand in undoing a lot of the economic damage caused by inflation and the over regulation and taxation of the US economy that has hindered the poor and middle class in this country.

This morning it is being reported that India has offered to slash tariffs with the US to less than 4% from the current average of nearly 13%  to try to secure a potential trade deal. This comes the day after what was a “breakthrough” trade deal between the United States and the United Kingdom. The deal was described as a framework or heads of term agreement that will look to increase bilateral trade between the US and Europe while the US maintains a 10% tariff on most British goods. Of course the European Union continues to be stubborn, not willing to negotiate at this point. The EU had previously approved retaliatory tariffs of up to €18 billion on US goods which included everything from motorcycles to fruit and wood that was in response to US tariffs on European steel aluminum and cars and a 10% universal tariff on most goods. The EU did pause those tariffs on April 10th but decided to go ahead and put them back into place yesterday.

They should negotiate swiftly, as potential deals with the UK and India, the world’s fastest-growing economy, may leave the EU behind. This is especially true if the trade talks between China and US officials on Saturday and Sunday are successful and bear fruit. Plus or minus a 10% fruit tariff.

From a broader perspective, President Trump deserves more credit for the factors leading to low energy prices. His common-sense approach to energy policy, whether for economic or national security reasons, is yielding significant benefits. President Trump’s policies have already contributed to a decrease in prices.

Regulatory costs related to energy can significantly impact consumer prices, potentially increasing costs by 10 to 15%. Estimates suggest that regulatory expenses for US energy production may range from $60 billion to over $100 billion annually. Regulatory costs increased significantly under Biden. As a result, many companies likely had to hire a substantial number of legal professionals to navigate the complexities of executive orders.

The American Petroleum Institute (API) was particularly critical of Biden’s so-called “Inflation Reduction Act” which helped fuel inflation in 2022. The API said that, “Hazardous Substance Superfund” financing rate, which is a reinstated tax on crude oil and imported petroleum, was set at 16.4 cents per barrel and indexed to inflation. This resulted in $11.7 billion in new costs for energy producers. It was also a direct tax on the poor and middle class in this country who bear the brunt of these policies.

The American Petroleum Institute also pointed out that the methane emission reduction program, a new tax on methane, that started out at $900 per ton in 2024 skyrocketed to 1500 dollars per ton by 2026 and that added over $6 billion in new costs for oil and gas companies. Additionally, producers in the industry expressed concerns that the methane tax might negatively impact smaller producers. They believe that an excessive tax could reduce production and lead to consolidation of power among larger energy companies.

So the markets are already reacting to the fact that President Donald Trump has reduced many of the regulatory costs caused by Biden’s executive orders. When President Trump declared a national energy emergency citing inadequate energy infrastructure and high energy prices as a threat to national security, this was a signal to the market that prices in the United States and the world will go lower. Not so much directly because there will be greater supply of oil, but also because the cost of doing business is going to be huge.

The other thing that President Trump is doing that’s going to lower the cost of energy is the department of government efficiency – DOGE. By eliminating government fraud and abuse, it will allow us to have a better running government that’s going to be more efficient and help reduce the budget deficit in the United states.

Now with President Trump’s trade deals in place we’re starting to see even more possibilities that tax rates here in the United States can go down while foreign countries pick up the slack. This will allow the private sector in the United States to grow and is going to be a big boom for the poor and middle class. President Trump also signed an executive order requiring 10 agencies and sub agencies to insert a one year expiration date to existing energy regulations set to expire in 2026 and unless extended, only regulation teams to serve American interests will be maintained. This effectively resetting the entire regulatory landscape for energy. This euro based regulation approach will eliminate outdated and costly regulations particularly those from the 1970s.

We could go on and on about more about President Trump’s invisible hand and we will in the future but today we better focus back on the markets. The natural gas inventory number was a little bit bearish but the market is still holding in there as weather will be the key.

The Energy Information Administration reported 104 billion cubic feet increase in supply last week which was more than expected. That offset expectations for warmer weather and the return of the Freeport liquefied natural gas terminal that’s back online which is going to help support prices.

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