The Trump Corruption Tax on the Oil Industry
May 13, 2026
Photograph Source: The White House – Public Domain
Since Trump began his war on Iran, there have been a number of occasions where the price of oil futures tumbles just before Trump issues one of his “peace is at hand” proclamations on Truth Social. These drops have been driven by very large trades, in the hundreds of millions of dollars.
There are two possibilities here. One is that a major trader in the futures market has a sixth sense that tells them when peace is in the air. The other possibility is that someone in Donald Trump’s inner circle is making some big bucks on their inside knowledge.
Not being a believer in the supernatural, I go with option #2. While it’s clear that someone in Trump’s family or circle of friends is the big winner, the question is who is the loser? Krugman raised this in his post, but I think it’s worth taking his discussion a step further.
He makes a reference to Polymarket, but then says that futures are about insurance, not gambling. Actually, the gambling analogy is useful.
Anyone who goes into a casino understands (at least I hope they understand) that the games are rigged. If they play the slots, the house is going to take in 4-5% more than they pay out. People are still willing to play because they hope to get a big payoff before the odds catch up with them.
But suppose the house instead takes out 10%. That would make people less likely to play the slots. Even worse, suppose the house takes out 10%, 15%, or 20%, and they lie about it, saying they only take 4%? That would make people even less likely to play.
Let’s go back to the oil futures market. People in the industry sell oil futures so that they can lock in a price. They know that the traders in the industry will get a cut, but they consider this a worthwhile cost to lock in an expected price. The same holds true at the other end of the market, where large buyers like airlines lock in a price to protect against unexpected surges.
Now suppose that everyone knows that the Trump family and friends are trading on inside information, meaning that they, rather than other market participants, will get the benefit of big moves. This effectively raises the cost of insurance, since all the other actors in the market will be less likely to be on the right side of big moves. This is where the house suddenly starts taking out 15% from the slots, instead of the promised 5%.
When the actors in the market recognize that it’s a crooked market, it means they are less likely to play. This means they are less likely to buy the insurance that the future markets offer. And the inability to get low-cost insurance means it is more expensive to the industry to drill and more expensive for buyers to rely on oil as a fuel.
That is what an oil tax would do as well, which is why many environmentalists advocate taxes on oil and other fossil fuels. In this case, Trump is effectively imposing a tax on the oil industry, but it takes the form of his family and friends ripping off actors in the market. But from the standpoint of those wanting to discourage fossil fuel use, it has the same effect.
This is yet another way in which Donald Trump is the biggest promoter of the green transition ever. He may not be doing it on purpose, but between his war-driven jump in oil prices and his corruption tax on the oil market, he’s doing one hell of a job.
This first appeared on Dean Baker’s Beat the Press blog.
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