Publications: Notes at the Margin

Diesel Use: Trade War Victim?

Will the US Become a BBB Country? Implications for Oil (May 27, 2025)

 

In this report, we first discuss the drop in distillate use that we see as an early warning of the coming “Trumpression” (Trump depression). We note that a drop in distillate use preceded a decline in real GDP in 2008. Today's reduced consumption may presage a similar GDP decrease in late 2025 and 2026.

 

Next, we focus on the United States as a “BBB” country. Republicans in the House of Representatives just passed Donald Trump’s “Big Beautiful Bill,” calling it the “Triple B.” Financial Times Gillian Tett picked up on this, noting that “future historians might well chuckle at the irony—and/or Trump’s lack of self-awareness” in naming the bill after the lowest threshold for investment-grade debt. Her remark came days after Moody’s cut the US credit rating from AAA to Aa1.

 

The lower rating will raise the cost of financing the United States’ rising national debt. At the same time, among other adverse effects, the cuts laid out in Trump’s BBB would leave the US more vulnerable to losses from hurricanes, earthquakes, tornadoes, and other disasters. This vulnerability would translate to lower-than-expected economic growth and diminished oil consumption.

 

To be blunt, Trump’s BBB, if passed, will not be good for oil.

 

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