There's No Easy Cure for High Gas Prices

(Bloomberg Opinion) -- Today’s Agenda

There's No Easy Cure for High Gas Prices

Solving the Gas-Price Conundrum

Last week, Liam Denning and Elaine He explained the stark political math behind why President Donald Trump seems so agitated about high gasoline prices – it hits red-state drivers/voters the hardest. The big question is what, besides tweeting, can be done. The short answer is not much, although Trump and some congresspeople have ideas.

One fairly radical option would be to release oil from the Strategic Petroleum Reserve, which is like Canada’s strategic maple syrup reserve, but for oil. This would give Trump the satisfaction of saying he’d done something all by himself to help drivers. But it would not exactly, you know, lower gasoline prices, Liam Denning writes in a new piece, given the current state of market logistics, supply and demand and other factors.

OPEC is a frequent target of Trump’s ire, and lawmakers in both houses of Congress have recently introduced bills to make it possible for the government to sue the oil cartel if it thinks it’s artificially squeezing prices higher. But hobbling OPEC is no panacea for high oil prices, writes Julian Lee. The cartel may be problematic in many ways, but it can help balance supply and demand in the oil market, sometimes even in ways that help consumers. Otherwise we might have had, say, $300 oil during Libya’s revolution in 2011.

That may help explain why other presidents have vetoed such “NOPEC” bills in the past. The current president might break with that precedent, as with so many others.

Trump Vs. The Fed

One of those precedents is the decades-long tradition of presidents staying out of Federal Reserve policy-making. Trump criticized the Fed’s rate hikes a couple of times last week, raising concerns about the central bank’s political independence. Stephen Mihm writes Trump is harkening back to the old days, when presidents regularly meddled with the Fed. In some cases it may have helped them with short-term goals – but wrecked the economy

Tyler Cowen, meanwhile, argues Trump isn’t trying to control the Fed, but just preparing it to be the scapegoat if the economy goes south.

Bonus Fed reading:

  • The Fed may sound dovish notes at its meeting next week. – Mohamed El-Erian

Car Trouble

Fiat Chrysler Automobiles NV suddenly and unexpectedly replaced CEO Sergio Marchionne this weekend. Chris Bryant writes the next CEO, Mike Manley, will have a tough job following the man who saved Chrysler from the edge of oblivion. Marchionne also ran Ferrari NV, and his loss is even more devastating for that company, Chris writes: “The prancing horse has achieved such a giddy valuation essentially because one man willed it so. Without him, Ferrari looks a little more ordinary today.”

Speaking of giddy valuations, Tesla Inc.’s stock price tumbled today on a report the electric-car maker has asked its suppliers to refund some of the cash it has paid them, in order to help it turn a profit. Liam Denning examines this, um, unorthodox request and finds it says some troubling things about just how much cash Tesla is burning

Bubbling Controversy in California

Egged on by the soft-drink lobby, California recently told local governments they couldn’t tax sugary soft drinks. So public-health advocates are fighting back by pushing a statewide tax on such drinks. Bloomberg’s editors applaud this and say they other states should follow suit.

Other editorials:

Iran Under Twitter Fire

Trump’s all-caps, angry tweet at Iran last night is the result of Tehran refusing to play to Trump’s ego by trying to make nice with him, writes Leonid Bershidsky. It could learn a thing or two from North Korea’s Kim Jong Un, whose summit with Trump “made for a great TV show” and boosted Trump’s standing. Then again, Leonid notes, Iran may feel the consequences of snubbing Trump won’t be too dire. 

Sometimes it pays not to play Trump’s game, after all. Many Latin American countries will soon find out – instead of trying to cut trade deals with the U.S., they’re turning to suddenly more-inviting partners in Europe and Asia, writes Shannon O’Neil.

Chart Attack

The gap between General Electric Co.’s earnings numbers and reality has gotten too wide, writes Brooke Sutherland.

There's No Easy Cure for High Gas Prices

Speed Reading

Trump's tweet at Amazon.com Inc. ruins a perfectly good antitrust argument. – Joe Nocera

Imagine if Trump could just keep his mouth shut. – Stephen Carter

Accused Russian spy Maria Butina found a willing target in Trump’s GOP. – Frank Wilkinson

Moscow is a beautiful, well-run Potemkin village. – Mark Whitehouse

The Bank of Japan isn’t letting go of its yield-curve-management tool soon. – Marcus Ashworth

China could use a little more Confucianism in its foreign policy. – Michael Schuman

How dominoes taught me to love math. – Cathy O’Neil

ICYMI

Paul Manafort’s trial was delayed. Trump considers taking security clearance from Obama officials, along with California’s smog-fighting capability.

Kickers

We are watching the third act of Tiger Woods.

A stellar intruder may have warped our solar system.

Electric cars were cooler in the ‘70s.

Note: Please send electric cars, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mark Gongloff is an editor with Bloomberg Opinion. He previously was a managing editor of Fortune.com, ran the Huffington Post's business and technology coverage, and was a columnist, reporter and editor for the Wall Street Journal.

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