Analysts at Natixis, point out that higher oil prices are good for the United States as the effect in investment and employment in the oil and mining sector outweighs the impact on real income.
Key Quotes:
“Donald Trump has welcomed the recent fall in the oil price and has asked the Saudis to continue to increase their production to lower the oil price. Trump’s position in this area is odd since a high oil price in reality is good for the United States”.
“The United States is still an oil importer, and a rise in the oil price therefore reduces Americans’ real income; But a rise in the oil price increases investment and employment in the oil and mining sector, and this second effect currently outweighs the first effect.”
” Why does Trump ask OPEC countries to increase their oil production to lower the oil price? Trump has stated that he wants lower oil prices and therefore more oil production in the Middle East, to boost Americans’ income. But he seems to forget that the United States has become a large oil country, and that, all things considered, a rise in the oil price is positive for the United States due to its positive effects on value added, investment and employment in the oil sector.”
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