“The administration’s chaos is a disaster for the commodity markets,” one executive at an exploration and production, or E&P, firm writes. “‘Drill, baby, drill’ is nothing short of a myth and populist rallying cry. Tariff policy is impossible for us to predict and doesn’t have a clear goal. We want more stability.” Another adds that, “I have never felt more uncertainty about our business in my entire 40-plus-year career.”
Houston C-suiters are particularly worried about prices amid rising interest rates and production costs. Trump’s tariffs on steel, especially, are pushing those costs even higher. According to one survey respondent, the tariff announcement “immediately increased the cost of our casing and tubing by 25 percent even though inventory costs our pipe brokers less. U.S. tubular manufacturers immediately raised their prices to reflect the anticipated tariffs on steel.”
As one executive put it, “Our investors hate uncertainty. This has led to a marked increase in the implied cost of capital of our business.” The executive blamed the “conflicting messages coming from the new administration. There cannot be ‘U.S. energy dominance and $50 per barrel oil’; those two statements are contradictory.”
Even as domestic oil and gas production hit record highs under the Biden administration, fossil fuel CEOs whined endlessly about needing regulatory relief and nicer words from the administration. As they’re finding out, the grass isn’t greener in MAGA-land. Since the very beginning of this country’s oil and gas extraction, Democrats and Republicans alike in government have gone to great pains to keep the sector going through subsidies, bailouts, high-level market coordination, and diplomatic efforts to open up markets for their products. The decades of industrial strategy that have built and sustained the U.S. oil and gas sector are complicated. Despite all its love for the fossil fuel industry, the Trump administration may just not be up for the complex task of keeping it happy.
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