Nobel Prize-winning economist Paul Krugman says President Donald Trump's newly announced plan to bring down diesel prices by buying Russian oil would have essentially no impact on the United States — assuming the deal gets off the ground at all.

Writing Monday on his Substack, Krugman argued the plan may not even be legally available to the White House. "He's not allowed to do this: Sanctions preventing purchase of Russian oil are law, not a choice on Trump's part," he wrote. "But under Trump, laws are suggestions at most, so it might happen anyway." Those sanctions were imposed in response to Russia's full-scale invasion of Ukraine.

Krugman also cited a recent piece by Professor Phillips O'Brien suggesting that Trump no longer appears to care about hiding his support for Russian President Vladimir Putin and his ongoing war against Ukraine.

A matter of simple arithmetic

The central flaw, Krugman explained, is the scale of the transaction. Trump said he was bringing in "300,000 tons" of oil for Americans — a figure Krugman found strikingly small.

"That's a bit over 2 million barrels," he wrote. "America consumes approximately 4 million barrels of distillates — diesel (mostly) and heating oil — every day."

That scale matters because distillates are workhorse fuels: diesel moves the country's freight by truck and rail and powers farm machinery, while heating oil warms homes in colder regions, which is why fuel supply feeds directly into shipping rates and winter bills.

Rhetoric moves markets — until it doesn't

The dispute unfolds against a familiar backdrop. From the early days of the Iran war, Trump claimed the conflict would end shortly — within weeks, then within another few weeks. Each comment helped encourage the energy market, and some of his statements temporarily pushed down fuel costs.

That tactic has a limited shelf life. Trump has repeatedly promised an end to the war and a deal on high oil prices, announcing them several times a month. Thus far, the war has raged on.

Nor have Trump's words only lowered prices; his rants have raised them too. After his April 1 threat to send Iran "back to the stone ages," prices surged, eventually closing more than 7 percent higher, above $109 a barrel. Bloomberg News found that markets have since become less responsive to Trump's rhetoric and more focused on physical supplies and cargo movements. By that standard, the markers to watch on the Russian diesel plan are concrete ones: whether the purchases can clear the legal barriers Krugman describes, and whether any physical cargoes actually move.

'Maybe 12 hours' worth of diesel'

Those findings prompted Krugman's sharpest question: "So Trump is betraying an embattled democracy, demonstrating our faithlessness to the whole world, seriously damaging whatever is left of America's leadership in the world, for the sake of maybe 12 hours' worth of diesel. Really?"

In his view, no one at the White House actually did the math on what the announced volume amounts to. "They had no idea that it was trivial for an economy the size of America's," Krugman wrote. "I might add that this is [a] general issue with Trump: he often touts trivial policies as major achievements, and it often seems obvious that he has no idea how big America and the world are. Arithmetic, I guess, suffers from Trump derangement syndrome."

Independent calculations point the same way. As Yahoo Finance calculated: "According to the International Energy Agency, the world consumes 855 million barrels of diesel per month, or just under 115 million metric tons. That means the 300,000 tons for the month of October would be enough diesel for about 11 minutes a day of consumption. To put it another way, it would represent about 5 percent of what the U.S. exports daily."

Other economists have made the same point: the "tiny deal" is so small that it is unlikely to have any impact at all.

There is also a closer alternative. Canada, America's northern neighbor, has a diesel surplus; under normal circumstances it ships that fuel to American refineries, meaning the United States could source its supply from a nearby partner rather than shipping it from Russia.

Source: Alternet