President Trump hopes to use his success in helping broker an oil deal earlier this month to boost his 2020 prospects at a time when a deepening recession threatens it.
Yet a week after the deal was reached, U.S. oil prices plunged off the cliff yesterday into negative territory for the first time ever. The dynamic is stirring the political debate about whether oil could be a deciding factor in a presidential election for the first time in decades: Could it sway voters in shale-rich Pennsylvania? Could a collapse help Democrats win over congressional seats in Texas? Will Trump's April 12 tweet boasting that the deal would "save hundreds of thousands of energy jobs" be viewed as a "mission accomplished" moment, like that of George W. Bush prematurely hailing victory in Iraq?
Trump yesterday downplayed the price drop, telling reporters it was due to short selling in the financial markets and that prices would rebound.
"If you look a month into the future, I think it's at $25 or $28 a barrel," Trump said at a White House briefing. "We've already done that," he said in rejecting the idea that Saudi Arabia or other countries should cut production further.
Immediately after the Trump-enabled deal between Russia and Saudi Arabia to cut oil production on April 12, Trump's reelection campaign started touting the president's role in securing the agreement and attacking his likely Democratic challenger, former Vice President Joe Biden.
Campaign senior adviser Lara Trump, the president's daughter-in-law, and her guests used the settlement as a selling point last week in a virtual campaign town hall streamed on Facebook, for example.
"In this global conflict over devaluing the price of oil, once again, it took a very special president to step up and say to these global partners, 'Hey, enough's enough, knock it off,'" American Conservative Union Chairman Matt Schlapp said as Lara Trump touted the Saudi-Russia deal.
President Trump and his campaign also have sought to use the deal to paint a contrast between him and Biden, who has said little about oil markets but has suggested green jobs could be part of the coronavirus recovery effort. Critics of the president, however, point out that the oil deal has not stopped plunging prices. Democrats also are painting the president as favoring corporate bailouts over individuals.
Rep. Alexandria Ocasio-Cortez (D-N.Y.) welcomed the historic price plunge yesterday with a tweet that was quickly deleted amid a backlash from critics, including conservative environmentalists and Republicans who accused her of celebrating potential job losses.
"You absolutely love to see it," she said in the tweet that was later removed. "This along with record low interest rates means it's the right time for a worker-led, mass investment in green infrastructure to save our planet *cough*"
She later tweeted that "fossil fuels are in long-term structural decline. This along w/ low interest rates means it's the right time to create millions of jobs transitioning to renewable and clean energy. A key opportunity."
As a selling point, however, the oil deal may be most salient in oil-rich states that are already reliably Republican — and among voters who prize national security.
"If the oil market damage is behind us ... and there's optimism in the energy sector, he'll have bragging rights," Bob McNally, founder of oil consultant Rapidan Energy Group, said of Trump. "He can go into these states where oil is strong and say, 'I rescued the industry.' And for folks who are not in the industry, maybe older folks, Florida voters who care about American strength and vitality, they'll be like, 'That was damn good. His methods are a little rough, but he got in there and he saved an important industry.' I think it will appeal to folks who see our energy boom as a source of national strength and national security."
Yet McNally, who was a former energy adviser for Bush, cautioned that if oil prices remain low and Trump is further pressured by the industry to take action, his choices may be constraining: The administration has not ruled out imposing tariffs on imported oil, but such tariffs would be anathema to refinery operators, including in Pennsylvania, a state Trump won narrowly in 2016 and which has been hammered by coronavirus-related job losses.
"If I'm President Trump and I'm thinking we need to move to plan B and tariffs, I'm asking myself what political price will I pay for plan B," McNally said. "The bigger risk may be upsetting the refineries, especially in states with a big refining presence and, with that, Pennsylvania."
Others are suggesting the oil deal could bring Trump trouble beyond the reliable red, oil-rich states when the pandemic has thrust millions of Americans out of work.
"The president, whose political problems are mounting by the day as the economy heads into the greatest depression since 1929, is not exactly going to want to be perceived by the American people as the guy who was trying to increase the price of oil at the gas station," said Bruce Riedel, a senior fellow at the Brookings Institution's Center for Middle East Policy.
"That may be important if you're [Sen.] Ted Cruz in Texas or if you're the governor of North Dakota, but in most of the United States most consumers are happy as can be that the one thing that they can buy now that they couldn't afford before is as much oil as they want for their car or their boat. I don't see this as being a winning political argument for the president to be trying to push the price of oil up again," Riedel said.
Pennsylvania and Texas
The two states that perhaps could be swayed the most politically by the oil crash are Texas — which has suffered thousands of oil layoffs — and Pennsylvania — an energy-rich state that Trump won by fewer than 45,000 votes in 2016.
Trump's enthusiasm for the oil and gas industry was expected to be a factor in Pennsylvania, where hydraulic fracturing had helped drive an economic boom.
Trump's campaign and the National Republican Congressional Committee pounced on Biden in March for a conflicting message on fracking. Biden said in a presidential debate that month that he would seek to ban all new fracking, but his campaign walked that back, saying it was meant as a reference to his pledge to stop fossil fuel extraction on federal land (E&E News PM, March 16). The Biden campaign did not respond to multiple requests for comment.
Union members who had long backed Democrats swung for Trump in 2016, but shale oil operators have been hit by overproduction and there is worry about the industry. And Biden is viewed as more moderate, unlike former Democratic challenger Sen. Bernie Sanders (I-Vt.), who was widely viewed as an existential threat to the industry, said Christopher Borick, director of Muhlenberg College's Institute of Public Opinion in Allentown, Pa.
"The president has heralded the fracking boom story as part of his narrative as president, that fracking has boomed, that it will continue to boom under him," Borick said. "Now that the industry is feeling all kinds of pressure and challenges, does that undermine his pitch to lots of Pennsylvanians about his need to be reelected? It goes part and parcel with the broader and now much deeper economic challenges that weren't there a couple of months ago."
The college's last poll in February showed Trump and Biden tied in Pennsylvania, but that was well before Biden routed his rivals on Super Tuesday and began to coalesce party support. Earlier polls had Biden leading Trump by 9 percentage points, and Borick, who hopes to poll next month, said he believes the race is unsettled.
"Those areas are feeling hit hard, does Trump's pitch have the same connection that it did in the past, under these circumstances?" Borick asked. "Other than the certainty that Pennsylvania matters, I've never seen more uncertainty."
In Texas, analysts say the oil crash could play more into congressional races, where Democrats hope to pick up seats as part of a "Texodus" — after a half-dozen Texas Republican members of Congress decided not to seek reelection.
But as the oil market bottomed out yesterday, Republicans were quick to accuse Democrats of being too late to help the industry.
Rep. Lizzie Fletcher (D-Texas) said she planned to file legislation today to purchase oil to store in the Strategic Petroleum Reserve, adding that "we must recognize that this price drop is a direct result of decreased demand because of the COVID-19 pandemic, and we must do all we can to combat this virus."
The National Republican Congressional Committee noted Republicans had included $3 billion for that purpose in the last stimulus bill and that Democrats had stripped the money out.
"Lizzie Fletcher stood with Nancy Pelosi and her allies to screw over Texas families," said NRCC spokesman Bob Salera. "Fletcher's sudden desire to actually do her job is too little, too late."
Trump has not benefited from the "rally around the president" glow that has marked other presidents in crises, and the economic crunch could cut against him, especially with independent voters, however.
"It's hard to imagine independents saying, 'Yeah, we like that,'" said Cal Jillson, a political science professor at Southern Methodist University. Voters in elections that occur during a recession are likely to blame the president, whether they are at fault or not, and Trump's handling of the coronavirus has been sharply criticized.
Yet Jillson expects Trump, who won Texas by 9 percentage points in 2016, to hold the state, but with a more narrow margin.
"If Trump were to lose Texas, it'll mean he lost 42 other states," Jillson said.
Previous economic disruptions have led to the party in power losing office, noted Brandon Rottinghaus, a political science professor at the University of Houston. Texas was dominated by Democrats in the 1980s, but the oil crash of the mid-'80s led to Bill Clements, a Republican, winning the governor's mansion in 1986.
Likewise, Rottinghaus said in an email, "The 2008-9 Great Recession fueled the rise of the Tea party in the nation and Texas more specifically, which led to major Republican gains in the next few cycles down ballot."
Green New Deal and oil
For now, Trump's campaign oil talk has been frequently linked with tying Biden to climate change proposals like the Green New Deal, which the president maintains would cost energy jobs and lead to higher energy costs in battleground states.
Biden, though, has not endorsed the Green New Deal, which he has called "a crucial framework for meeting the climate challenges we face." And some environmental groups say Biden's climate change proposals should go further.
That's not how Trump's campaign sees it.
"At an already tough time for Americans, Biden's Green New Deal would burden businesses and people with massive regulations, reverse the progress we have made toward our energy independence, and cost millions of jobs," Trump campaign spokeswoman Sarah Matthews said in an email.
On the Trump campaign virtual town hall last week, Lara Trump said Biden supported the Green New Deal, which she added would "kill hundreds of thousands of energy jobs and wreak havoc on states like Pennsylvania." By contrast, she noted President Trump had just secured the agreement with OPEC to save "millions of jobs" threatened by the dispute between Russia and Saudi Arabia.
Democrats say they plan to paint Trump's response as a sop to the oil and gas industry and point to a poll by a Democratic-aligned group that finds voters don't want the government to give aid to corporations over individuals.
"This is a classic example of the Trump administration at its worst, prioritizing corporate special interests in the midst of an unprecedented public health and economic crisis," said Pete Maysmith, senior vice president of campaigns for the League of Conservation Voters Victory Fund, which endorsed Biden this week and is targeting swing voters in six states, including Pennsylvania with a $14 million advertising campaign criticizing Trump's environmental record. "What we see is the Trump administration raging into the night to try to hold onto the past of the fossil fuel industry."
But Dan Eberhart, CEO of Colorado-based Canary LLC, one of the largest private oil field service companies in the nation, said workers across the industry are being hurt by the nationwide shutdown response to the coronavirus.
"It's hitting the guys who drill the wells and the refinery workers who turn it into gasoline," Eberhart said. "At the same time, you have the left dancing on the graves of these companies and their workers. That's a major mistake. These are American companies and jobs — it shouldn't be a partisan issue."
Stephen Brown, a former House Democratic aide and oil refining industry consultant with RBJ Strategies, noted that the oil patch is "ruby red" and unlikely to abandon Trump, who from an industry perspective is "at least checking the box on doing what he can."
But Brown said widespread disruption in the industry, including unemployment, could complicate Trump campaign efforts to find its voters. The pressure may be greater on Trump's campaign, which needs to find and get all his 2016 voters to the polls, as well as find more of the older, white voters who fueled his initial win.
"And where does voting fall in terms of a priority?" Brown asked. "The biggest effect may be the ability to develop accurate turnout models for the purposes of both polling and voter outreach. Will campaigns be able to find the voters that they normally would be able to find?"
Reporters Mike Lee and Timothy Cama contributed.