Donald Trump re-entered office last year with a plan to establish American “energy dominance”. But, as gas prices soar by as much as 25% today, that promise already looks in danger.

The basic goal of this energy dominance policy was to exploit America’s substantial reserves of coal, oil and gas to drive down energy prices. A great manufacturing renaissance would then be ushered in with the help of his protectionist trade policy.

He started by tearing up all of Joe Biden’s plans to accelerate the transition to renewable energy. This included opening new oil and gas fields for exploration and drilling, lifting environmental regulations on carbon emissions and encouraging oil and gas firms to “drill baby drill”. The huge scope of his ambition then became starkly evident as he turned his attention to controlling foreign oil fields. He did this by raising talk of making Canada the 51st state, launching a limited operation in Venezuela and installing a pliant president, who then welcomed back US oil firms.

Then, with one rash and ill-considered decision, he brought it all to a halt. Regardless of whether Trump’s coordinated attack on Iran aimed to secure control of the country’s oil supply, prices heading north of $100 a barrel surely wasn’t on his agenda. The administration has protested that this is all part of a cunning plan and that oil prices will fall by the time of the election. But it’s becoming increasingly clear that the White House never took seriously the Pentagon’s reported warnings that Iran might close the Strait of Hormuz.

Now that the Islamic regime has done just that, the US has clearly lost control of the situation. The administration’s spitballing about possible solutions — getting other countries to send naval escorts, setting up a state-backed insurance scheme for ships, dabbling in oil futures — makes this painfully evident. The petro-president has been reduced to being a petro-supplicant.

Trump now finds himself in a tricky position. Unless the Strait of Hormuz is opened up, he may well have just ended his presidency. Even if the war were to end today, it will take months to restart destroyed gas plants, restore supply chains and clear backlogs. Futures traders, who are still presuming a relatively swift end to the war, don’t expect oil prices to fall below $80 until the end of the year at the earliest.

Meanwhile, this week’s Producer Price Index came in much hotter than expected, and that was collected before the outbreak of war. Future inflation readings are certain to go higher yet. This could mean that interest rates, which Donald Trump desperately wants to come down, could head upward.

It’s a dreadful cocktail for his economic program. With inflation, interest rates and energy prices all rising, talk of a US manufacturing revival will now be regarded ironically. It’s also a gift to his political opponents, with the polls now making the Democrats a lock on retaking Congress while giving them a 50-50 chance of flipping the Senate. This is a scenario that was inconceivable just a couple of months ago.

The apparent solution, though, is no less palatable. It looks inescapable that a reopening of the Strait will require a ground force to secure the coastline. This could give rise to a long and bloody occupation, something for which the American public has no stomach. Barring some dramatic new development, like the collapse of the Iranian regime and the emergence of a pliant leader, America is falling behind in this war. Trump may have started the clock running towards becoming a lame-duck president.

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John Rapley is an author and academic who divides his time between London, Johannesburg and Ottawa. His books include Why Empires Fall: Rome, America and the Future of the West (with Peter Heather, Penguin, 2023) and Twilight of the Money Gods: Economics as a Religion (Simon & Schuster, 2017).

jarapley

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