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The oil shock triggered by the crisis in the Persian Gulf has pushed crude above $100 per barrel, reviving familiar fears of economic turmoil in the United States driven by surging gasoline and diesel prices. Political leaders have long lamented high oil prices, yet President Donald Trump celebrated the price spike last week, arguing that the “United States is the largest oil producer in the world, by far, so when oil prices go up, we make a lot of money.”

His embrace of higher oil prices marks a sharp departure from his past pledges to lower costs at the pump. Trump has long decried high oil prices, and Energy Secretary Chris Wright has argued that elevated prices may benefit a few oil companies but not the “99 percent of Americans” who consume these energy products.

The oil shock triggered by the crisis in the Persian Gulf has pushed crude above $100 per barrel, reviving familiar fears of economic turmoil in the United States driven by surging gasoline and diesel prices. Political leaders have long lamented high oil prices, yet President Donald Trump celebrated the price spike last week, arguing that the “United States is the largest oil producer in the world, by far, so when oil prices go up, we make a lot of money.”

His embrace of higher oil prices marks a sharp departure from his past pledges to lower costs at the pump. Trump has long decried high oil prices, and Energy Secretary Chris Wright has argued that elevated prices may benefit a few oil companies but not the “99 percent of Americans” who consume these energy products.

This apparent dissonance reflects the dramatic shift in the U.S. energy landscape over the past decade—from a large net importer of oil to a significant exporter. High oil prices have long imposed pain at the pump, but today, they also bring significant benefits to U.S. oil producers. This means that rather than draining income abroad, higher oil prices increasingly redistribute income within the United States.

The result is a shock that still hurts consumers but has the potential to be less destructive or, at least in theory, even net positive for the economy as a whole. With the right policy changes, the previous vulnerability to high oil prices can now be a source of strength. In particular, allowing the tax rate paid by U.S. producers to vary with changes in in oil price could help cushion the blow to consumers and, in doing so, increase the economy’s resilience to oil shocks.

The scale of the current........

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