Victor Davis Hanson: Why Gas Prices Stay High Even When America Drills Its Own Oil

Editor’s note: This is a lightly edited transcript of “Victor Davis Hanson: In His Own Words” from Daily Signal senior contributor Victor Davis Hanson. Subscribe to Victor Davis Hanson’s own YouTube channel to watch past episodes.

Sami Winc: “Could you explain, VDH, why the media and government doesn’t remove the smoke and mirrors from this issue, which is the gas prices? The internet tells me that no oil from the Strait of Hormuz comes to America, yet our petroleum prices skyrocketed when we attacked Iran. 

“President Donald Trump declared America energy independent, yet the world market still controls our prices. Why can the Iranians pay 30 cents a liter for gasoline, a year prior to the attack on Iran, and the poor people of Venezuela pay nine cents a gallon for gasoline? What gives?”  

I’m not sure about that, those prices. 

I hope he’s right on that.  

Victor Davis Hanson: Well, there’s a multifaceted—And again, I’m just hearing this for the first time. But as a general rule Westerners in Europe and the former British Commonwealth, New Zealand, they are maddened by the Green New Deal type of Al Gore thinking. 

So in their way of thinking, they tax gas, and they let it go to as high as possible. I’ve gone to Europe every summer, until I got ill, for 22 years, at least once or twice, sometimes three times, and it was about $8 or $9 a gallon, and that was deliberate. They did not subsidize. It’s just the opposite in the so-called Third World of Africa, Asia, not so much Africa, but Latin America, Venezuela, and places that have oil, but especially in the Arab countries and Iran. 

When you have an autocratic government, the last thing you wanna do when you’re exporting oil is to have people paying a lot for gas,because that’ll make them furious. So what they do is they subsidize the price of gas. The government comes in, and they take barrels out of the national petroleum company, and they refine it at a market loss. 

Not really a loss to them. The reader has a very good point because they control everything, the oil, the refinery, but they want the people to be happy.  

Now, his other point is we produce around, I think we’re getting up to 14 million barrels, and we import four from Canada. That’s 18, and we’re in the 20-something, depending how many barrels we consume. 

And if we wanted to, we could buy the Canadian oil, and we could stop all exports to Japan, all natural gas and oil, to the degree it goes to Europe, and just consume our own oil and control the price.  

But we’re a free market economy, so you’d have to tell a Texas petroleum guy, a fracker that was spending a lot of money, and he’s right there in Texas, and you’ve got a big European, or Japanese oil tanker right on the  harbor at Houston, and you’re gonna say, “You’re an American and that cost you about $40 or $45 to pump, so I want you to sell it to the U.S. government to be refined or private for no more than $55.” 

And what would he say? He’s gonna say, “I don’t know what the price is gonna be. It’s gonna collapse when the war’s over, and I’m gonna lose a lot of money ’cause I’m gonna keep pumping, and it might get down to $45. So I gotta make the money where I can.”  

So we allow that. And so what I’m getting at is all the private companies that produce oil in the United States at enormous amounts, and the more oil we import from Canada could be—It is basically valued at, right now I think it’s $88 a barrel. But their costs to produce it are probably around $40. So they’re making a huge profit. They could make a profit, and we could have $4—right now it’s $4.50 nationwide or something. They could make a profit, and they could sell the oil for a price and the refinery that it would be about $3 a gallon, $2.50 a gallon, but that’s not how we operate with anything, food or anything. 

And you know, when you had plums and Japan was offering for, I remember, Fuyu apple pears like $80 for 20 pounds, and the price here was for 20 pounds was $20, and everybody was trying to get this new crop over to Japan so you could get $80. And that drove up the price here because there were fewer of this, at that time, a boutique exotic everybody wanted. 

They don’t care that much now for Asian pears. We had about 10 acres of them. But I wish that the oil companies would give the consumer a break-  

Sami Winc: Yeah.  

Victor Davis Hanson: And take a little bit less profit. Trump is trying now to—He’s had it with [Volodymyr] Zelenskyy. He told Zelenskyy do not hit the diesel refineries, that make diesel fuel, because if you do, Russia supplies ships diesel fuel, refined diesel fuel to China, to Asia, and that keeps the world price down, and we don’t have enough refineries. 

So, but they know that, and Russia’s making a killing, so Zelenskyy didn’t listen to him. He just kept hitting, and that is driving diesel prices up.  

Sami Winc: Yeah.  

Victor Davis Hanson: So Trump said today … I disagree with that, by the way, that he’s a terrible president, he wants him gone. Well, he’s right in the middle of a war, existential war, you know. 

You don’t, you don’t quite say that. But I can see why he’s frustrated. And Zelenskyy wants it both ways. He said I want another $140 billion we’ve given them over the last four years, five years, but I’m not gonna listen to you. And Trump is saying you’re gonna lose me the midterms, along with Iran, so I don’t want you … 

Just hold off until the midterm. Do not hit there. So he bought diesel fuel the other day from Putin.  

Sami Winc: Yeah.  

Victor Davis Hanson: And the other thing Zelenskyy doesn’t understand,  the American Never Trump and Left don’t understand: Trump doesn’t have any particular empathy for Putin or Russia. No. He got out of the missile deal. 

He destroyed the Wagner Group. He told the Germans not to do the Nord Stream pipeline. He taxed the oligarchs. But he does believe in Kissinger triangulation.  

He wants to turn Russia with its 7,000 nuclear weapons, and its oil, against China and vice versa to get leverage. Yeah. And he can’t do that as long as the Ukraine war is on, because [Vladimir] Putin is the bad guy, and you can’t reward a guy that’s … 

The other thing that people don’t realize very quickly about that war. 

And I’ve tried. I said at the conference, “But everybody said Putin, it was a terrible mistake.” It was. And Putin has lost a million and a half casualties. Yes. And he’s incompetent. Yes. And he’s destroyed the economy. Yes.  

But what they don’t say is he has 20% of Ukraine. And with Crimea, I think he’s got six or seven million people that speak Russian, and his birth rate is one point three. 

So in a very sick way, the way he thinks, I’ve lost maybe a million people, but I’ve gained six [million] soon to be transferred into loyal Russian citizens. And that’s why that one of the reasons he did that is his birth rate is so low, and so he’s only got a 144 million people with this vast… 

And at one time, Ukraine was 41 million people. Had he been able to take Kiev, he would have had 185 million Russians, plus the Ukrainian bred. That’s why he was trying to do that. Yeah. And I’m glad he stopped. I wish Ukraine… But I said to a Ukrainian person, the other day, an expert in the Ukrainian war, I should say. 

I said, “My gosh, they’ve lost 10 million people. They had 31 million.” And he said, “Where did you get that figure, Victor?” I thought, “Well, I read it, and I prepped for the comment.” He goes, “It’s not ten million. It’s twelve to fourteen million.” I thought he was saying I was exaggerating.  

Sami Winc: Wow.  

Victor Davis Hanson: He said they’re below 30 million or 28 million. 

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