On December 31, the Financial Alliance reported (Editor: Liu Rui) that the incoming president of the USA, Trump, previously boasted during his campaign that once in office, he would significantly reduce the price of RBOB Gasoline in the USA.

However, an Energy market expert stated that if Trump truly fulfills this promise, it could end the USA's leading position in the Global oil sector and ultimately be more harmful than beneficial.

Will the USA only suffer losses?

Previously, Trump had repeatedly stated during the campaign that if he took office, he would reduce RBOB Gasoline prices in the USA by "half or more" within 12 months.

He stated during his campaign that he believed $1.87 is the "perfect" price for a gallon of RBOB Gasoline. However, despite the recent significant drop in RBOB Gasoline prices in the USA, according to the American Automobile Association data, as of this Monday, the national average price for RBOB Gasoline was $3.026 per gallon—still a considerable distance from Trump's envisioned "perfect price."

Energy consultant Bob McNally, president of Rapidan Energy Group, believes that if Trump wants to achieve his plan to reduce oil prices, there are only two options: first, the USA government must persuade Saudi Arabia to release a large amount of oil supply, which would erode the USA's market leadership; the other option is to drive the USA into a "catastrophic economic recession"—something Trump would clearly like to avoid.

McNally stated: "At a price of $1.50 per gallon, USA Shale Oil (which dominates local Energy) will cease to exist… You cannot have both a price of $1.50 per barrel and a thriving Shale Oil Industry. That's all there is to say."

Further increasing production will only weaken profits.

Relaxing regulations is the cornerstone of Trump's agenda. He had previously promised that once in office, he would allow the drilling of the Oil Industry. According to his vision, as USA oil producers significantly increase production, USA oil prices would naturally decline, allowing Americans to use cheaper RBOB Gasoline.

McNally stated that despite Trump's intentions being good, USA producers actually do not desire to increase production that much.

In fact, even before Trump took office, in 2024, USA oil producers' Crude Oil Product production had already reached a record level.

McNally stated that while the policy changes of the Trump administration may influence oil market prices to some extent, oil prices are largely determined by Global market supply and demand.

He stated that because not only has USA domestic oil production reached an all-time high, but also Global oil supply has exceeded demand, which has pressured oil prices this year. If USA continues to significantly increase production in the future, it may further weaken Industry profits, which would be an outcome that USA oil producers would not want to see.

"If oil prices fall, in the long run, you may see a natural decline in USA oil production," said Patrick De Haan, head of oil analysis at GasBuddy. "Oil companies have to be accountable to Shareholders."

McNally expects that by 2025, oversupply will become the dominant trend in the oil market. Meanwhile, McNally is closely monitoring the increasingly tense geopolitical situation in the Middle East. He warned that the escalating turmoil between Israel, Houthi rebels, and Saudi Arabia could threaten Crude Oil Product supply.

Editor/ping