Publications: Notes at the Margin

The Danger of Uninformed Political Intervention in Oil (July 6, 2026)

 

Shortages in most markets, but especially petroleum, occur most often when governments interfere with the logistical system in which raw materials move from producer to processor to distributor to retail marketer. Petroleum product shortages caused by such interventions have occurred in the United States and other countries. The Trump administration’s recent demand for $2.50-per-gallon gasoline could create another such problem, given the tight global diesel and jet fuel markets resulting from the war in Iran and Ukraine’s destruction of Russian oil infrastructure. Gasoline margins must stay high to maintain production. If desired, the Trump administration could quickly reduce gasoline prices by $0.25 per gallon by suspending the Renewable Fuel Standard program. Absent such an adjustment, the president has no cards to play.

 

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