President Donald Trump should impose tariffs on Saudi Arabia’s oil exports to the U.S. in response to the kingdom’s dumping of oil during record-low global prices of the commodity caused by coronavirus-related economic shutdowns, said Spencer McGowan, founder of McGowan Group Asset Management and host of NetWorth Radio.
McGowan joined Tuesday’s edition of SiriusXM’s Breitbart News Tonight with host Rebecca Mansour and special guest host John Binder to discuss the collapse of oil prices and possible U.S. policy responses. He recommended the implementation of tariffs on both Saudi and Russian oil exports to protect U.S. energy companies.
“When the Saudis and Russians dumped oil earlier in the crisis and drove the price down 10 to 15 dollars a barrel over the weekend, I would imagine the first phone call discussion between the Saudis and President Trump was, ‘You guys are going to wind up with a stiff tariff for dumping,’ which is a legitimate World Trade Organization response, and I believe that should happen to protect the companies,” McGowan determined.
McGowan continued, “[Saudi Arabia] deliberately set out to bankrupt U.S. companies with the dumping [of oil], and that needs to be addressed. It also needs to be addressed because Canada has heavier crude which can complete that optimal refining mix. The relationship with Canada needs to supersede [the relationship with] Saudi [Arabia] because I’ve never understood why we’ve been so cozy with the Saudis who support jihadists.”
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Saudi Arabia’s heavy sour crude oil exports are currently used as part of an “optimal blend” with West Texas intermediate oil at Houston-based refineries, noted McGowan.
“Your refining mix is critical,” McGowan stated. “Many Houston refineries were built to import the Saudi oil. There’s an optimal blend that has heavy sour crude — stinky sulfur crude, if you ask me about the Saudis, but anyway — the heavier crude mixed with the West Texas intermediate is an optimal blend. Most of the refineries are not equipped just to run on pure domestic oil, at least at this point.”
Imposition of tariffs would be a legitimate response to Saudi Arabia’s oil dumping according to World Trade Organization regulations, McGowan added: “I do think the tariff on the Saudis for dumping is a valid World trade Organization proposal.”
Canada’s heavy sour crude exports could replace those from Saudi Arabia with logistical changes, McGowan explained.
“The relationship with Canada can, in part, replace a lot of what’s happening,” McGowan said. “The transportation is difficult, because the Saudis have the supply lines and the tankers — a lot of them sitting full up off of our coast — and Trump should slap a tariff, at least temporarily, to say, ‘You guys came after us at our most vulnerable point, and therefore you need to pay a price,’ and that’s perfectly legitimate in World Trade Organization rules.'”
Mansour asked about a possible organization of Western oil-producing states as a counterweight to OPEC.
McGowan replied, “I do think there is a need for a unified approach [against OPEC], and Trump is there to lead it. OPEC would be an illegal cartel by U.S. Federal Trade Commission standards, right? Just an illegal collusion. How do you do that with U.S. companies? And bringing them together would be a positive step. Fly these guys up to Washington and actually sit down with them and say, ‘Okay, what do we need to do to make this right?'”
Breitbart News Tonight broadcasts live on SiriusXM Patriot channel 125 weeknights from 9:00 p.m. to midnight Eastern or 6:00 p.m. to 9:00 p.m. Pacific.
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