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0 pointsjmyeet1y ago0 comments

There's a huge factor in the increase in energy costs during the pandemic that doesn't get talked about much, weirdly. It gets attributed to greedflation but it's actually far simpler.

In 2020, the Trump administration pressured OPEC to cut production by about 9.7 million barrels a day [1], roughly 10% of the world's production. This was a 2 year deal. Look at the 5 year chart [2] and you can see exactly where this deal starts and ends. This is further confirmed by looking at OPEC oil production [3].

[1]: https://www.reuters.com/article/economy/special-report-trump...

[2]: https://tradingeconomics.com/commodity/crude-oil

[3]: https://ycharts.com/indicators/opec_crude_oil_production

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fny1y ago

This was only to balance out a demand collapse which occurred during the two day period. The Saudi's were deliberately pumping oil during the pandemic to bankrupt US energy companies which were over-leveraged in many cases, and Trump responded in a way I think any US president would have--I say this despite my hate of the man.

The coincidence in the price rebound over two years reflects pandemic induced demand which took two years to recover and some time for the related supply chain issues to resolve: it is very difficult to shut off and restart an oil well, which is part of the reason why we had an overcapacity of oil during the pandemic which led to negative oil prices. In the same vein, oil prices shot up immediately due to demand pull and slow response from producers.

This persistence in the price increase reflects broader increases due to inflation caused by "helicopter money": the government printed money into the economy, which has inflationary consequences. It's not greedflation, it's governmentflation.

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