A gas price sign at an Exxon gas station in Wendell, North Carolina, circa March 2026. Rising gas prices reflect real market signals from the Strait of Hormuz disruption. Price controls would only distort those signals. (Shutterstock/Wileydoc)

Trump Wants Oil Companies to Cut Prices. Here’s Why That Would Hurt the US Economy

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Trump wants oil companies to slash prices after the Hormuz disruption. But suppressing market signals during a supply shock risks shortages, underinvestment, and weaker US economic performance. 

President Donald Trump criticized fossil energy producers for “making too much money” as a result of the large supply disruption in the global market for crude oil attendant upon the closure of the Strait of Hormuz. Trump continued: [“The oil companies] ought to give some of that back to the public. And they better cut the retail price, the consumer price.” 

Narrowly, we must ask whether those comments reflect sound economic thinking. More broadly: What effects can we expect when policymakers seek to limit market price and profit responses to a major supply chain disruption?

Until Iran began to threaten and attack oil shipments transiting through the Strait of Hormuz, about 25 percent of the world’s maritime trade in crude oil and petroleum products, and roughly 19 percent of liquefied natural gas (LNG), transited through the Strait of Hormuz. Accordingly, the hostilities with Iran and its threats to shipping have created a supply disruption either the largest or among the largest in the modern history of the international crude oil market. 

It can surprise no one, therefore,........

© The National Interest