FEBRUARY 2025
Carrots, Sticks, and
Sledgehammers
Trump’s Options for Reducing U.S. Oil Prices
By Clayton Seigle
S
ince his second term began on January 20, 2025, President Trump has clearly signaled a desire
for lower oil prices. Executive orders, including “Unleashing American Enery,” as well as his
remarks to the Davos World Economic Forum audience on January 23, outline Trump’s case for
bringing down the price of oil.
Apart from the obvious direct advantage of reducing costs for consumers and businesses, Trump has
associated the benets of lower enery prices with two strategic priorities: rst, as an instrument
for taming ination. Trump believes that a lower enery price environment will pave the way for the
Federal Reserve to reduce interest rates and stimulate economic activity.
Second, Trump has asserted that lower oil prices will hasten an end to the war in Ukraine, ostensibly
because Moscow would be deprived of oil export revenues sucient to sustain its war eort. This
reason, however, may have been superseded by recent events, including a February 12 phone call
between Trump and Putin, a bilateral meeting of advisors in Riyadh on February 18, and Trump’s
February 24 prediction that the war could end within a few weeks.
What Oil Price Does Trump Prefer?
At an October 21, 2024, campaign rally in Greenville, NC, Trump said of U.S. enery prices, “We're going
to get your prices down so low. We're going to get them down 50 percent.” This may have included a
bit of election campaign hyperbole, seeing as crude oil and gasoline prices that day were $71 per barrel
and $3.14 per gallon, respectively, implying targets of $36 per barrel and $1.57 per gallon were the 50
percent reduction applied literally to the price of oil. Moreover, Trump was speaking about enery
prices in general, not crude oil and gasoline per se.
