Memorandum
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- Connor Quincy via RawStory - World News
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- Filed
- Economy·4 min to read
- Re
Economist: Trump's G7 Fuel Deal Adds Little New Oil
ReEconomist: Trump's G7 Fuel Deal Adds Little New Oil
Economist Justin Wolfers says the G7's 100-million-barrel fuel pledge is mostly leftover from a March emergency release, leaving a daily shortfall 15 times larger than the promised fix.
President Donald Trump's claim that allies agreed to a «massive» release of fuel to lower gas prices does not hold up to scrutiny, according to an economist who reviewed the fine print of the deal. Justin Wolfers, an economist at the University of Michigan, wrote in his Platypus Economics newsletter that the 100 million barrels of oil and fuel the Group of Seven pledged last week are largely what remains from an emergency release promised in March.
Trump posted on Truth Social on Friday that Europe had agreed to release a «massive amount» of diesel right away, presenting it as a concession won in exchange for dropping his threat to ban U.S. diesel exports. But Wolfers wrote that «almost nothing new has happened,» with the G7 agreeing to do what it had already promised months earlier.
The March pledge came after the U.S. attack on Iran made shipping through the Strait of Hormuz dangerous. International Energy Agency members agreed at that time to tap their emergency reserves for roughly 400 million barrels. By Wolfers's reading, about 100 million barrels of that pledge remain undelivered, and the G7's new communique simply commits the group to finishing the job within four months.
«This is an agreement to agree that they agree about the earlier agreement,» Wolfers wrote. He also flagged that the Energy Department offered oil companies up to 40 million barrels from the U.S. reserve on September 29 as part of America's share of the March pledge. That raises the possibility that a large chunk of what Trump credited to Europe is American oil already owed. Wolfers said there is no way to know for sure because neither the G7 nor the IEA has disclosed which countries owe what.
Even taken at face value, Wolfers argued, the release is tiny next to the shortfall. The package works out to about 0.8 million barrels a day, while traffic through the Strait of Hormuz was down about 12 million barrels a day from prewar levels as of August. «The daily gap is 15 times larger than the fix,» he noted.
The communique promises a «front-loaded substantial diesel release» within 20 days but offers no figures, no country breakdown and no way to enforce it. Wolfers pointed out that the window closes October 22, less than two weeks before the midterm elections.
Traders did not buy Trump's brag either, Wolfers noted. Diesel futures dropped after Trump's post but climbed back to about $4.55 a gallon wholesale within hours once the actual communique came out. «It isn't new, it isn't large, and it isn't enforceable,» he wrote. «It's the appearance of doing something without the thing actually getting done.»
The episode highlights the gap between political messaging and the mechanics of global energy markets. With the Strait of Hormuz still disrupted and the G7's commitment lacking specifics, the promised relief for drivers remains distant. Wolfers's analysis suggests that without new barrels or enforceable targets, the deal is unlikely to move pump prices meaningfully in the near term.
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