Oil Executives see disaster in Trump policies

Yarddog said:

The administration's chaos is a disaster for the commodity markets. '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," one executive said.

https://finance.yahoo.com/news/us-oil-executives-see-disaster-192149353.html

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Upstream​

Oil executives heap praise on Trump’s energy policy​

11 March 2025, 09:52

ConocoPhillips’ Ryan Lance: Trump has ‘best energy team in the United States we've had in decades’

Count Ryan Lance among the oil and gas industry leaders impressed with US President Donald Trump’s energy team.
“We've got probably the best energy team in the United States we've had in decades,” the chief executive of US operator ConocoPhillips, said Tuesday at the CERAWeek by S&P Global energy conference in Houston.

Lance’s comments echoed that of other fossil fuel executives at CERAWeek, who say the Trump administration has brought a breath of fresh air to the global energy discussion.

“Secretary Wright was correct yesterday in stating that at the core of any pursuit of prosperity by any society is indeed the availability of energy, and I think that is going to be central to whatever we do going forward,” Petronas chief executive Tengku Muhammad Taufik told the CERAWeek crowd Tuesday.

Department of Energy (DoE) Secretary Chris Wright and Department of the Interior (DoI) Secretary Doug Burgum “understand the business”, Lance said.

Depends on who you are willing to believe. Go to the root of the problem then work your way through it.

The oil business has always been boom and bust or highly cyclical. With prices currently fairly low for crude per barrel. ($69 per barrel) many producers are close to the break even point. So if oil declines from more production, some will stop producing at least until prices come back. I have heard that some already are cutting back on exploration. IEEFA brief: Oil majors’ shrinking capital expenditures (capex) signal ongoing decline of sector
Making matters worse is if the world has weaker demand from a recession. Sure oil companies like less regulation and more leases for oil drilling, but ultimately it brings intense competition and some companies will cut back some operations or even go out of business. The key to success is the same as any business, you have to be a supplier that has the lowest cost. Here is a break down of three oil fields in Texas and their break even prices. A Glance at Shale Break-Even Prices Amid Declining Oil Prices All oil production is not equal. Some places are far more profitable. (Qatar for example)
Drill baby drill only works if there is sufficient demand and good pricing. I suppose OPEC could roll over and reduce their supply but they also might increase their supply and try to bankrupt some USA producers.

Richard T said:

The oil business has always been boom and bust or highly cyclical. With prices currently fairly low for crude per barrel. ($69 per barrel) many producers are close to the break even point. So if oil declines from more production, some will stop producing at least until prices come back. I have heard that some already are cutting back on exploration. IEEFA brief: Oil majors’ shrinking capital expenditures (capex) signal ongoing decline of sector
Making matters worse is if the world has weaker demand from a recession. Sure oil companies like less regulation and more leases for oil drilling, but ultimately it brings intense competition and some companies will cut back some operations or even go out of business. The key to success is the same as any business, you have to be a supplier that has the lowest cost. Here is a break down of three oil fields in Texas and their break even prices. A Glance at Shale Break-Even Prices Amid Declining Oil Prices All oil production is not equal. Some places are far more profitable. (Qatar for example)
Drill baby drill only works if there is sufficient demand and good pricing. I suppose OPEC could roll over and reduce their supply but they also might increase their supply and try to bankrupt some USA producers.

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One thing is a fact, a nation's ability to increase their economy and manufacturing jobs is directly related to fossil fuel prices

In So. Cal the lower end Costco gas is about $4.20 a gallon right now, that doesn't reflect $68 a barrel in my opinion

Conclusion: Will president Trump cave to the oil producers or stand firm for lower energy prices, increased jobs, lower inflation?

Look at the 10yr graph, 1st quarter of 2020 when Biden tapped the national oil reserve that Trump built up $18 a barrel

"One thing is a fact, a nation's ability to increase their economy and manufacturing jobs is directly related to fossil fuel prices"

Yes, prices of all inputs are important to GDP growth and manufacturing including energy though this varies because some manufacturers are more reliant on oil (plastics for instance), others are more geared to electric prices.

In So. Cal the lower end Costco gas is about $4.20 a gallon right now, that doesn't reflect $68 a barrel in my opinion

Right again, the barrel price has a smaller effect in California because the state has higher taxes and more regulations that drive the price of gas.

"Conclusion: Will president Trump cave to the oil producers or stand firm for lower energy prices, increased jobs, lower inflation?"
Lower energy prices do cause job loses in the energy sector. Given that the inflation adjusted price of crude is very reasonable, it seems hard to lower it too much from here, as many will simply stop producing in both the USA and abroad. Opec too of course can change their output to increase or decrease prices. Cutting regulation though might be able to shave some off gas prices and Trump is keen on that. I have yet to hear of any state cutting gasoline taxes which will limit price decreases. 34 states have raised gas taxes since 2013. https://www.ncsl.org/transportation/recent-legislative-actions-likely-to-change-gas-taxes.

Trump said he did not care if new autos cost more. “I couldn’t care less if they raise prices, because people are going to start buying American cars.” Domestic manufacturers will also raise prices because competition will be more limited. Trump has good intentions but I think the sheer amount of tariffs are quite disruptive to manufacturing worldwide. There will be some moving plants to the USA, but others will wait and see what happens how soon tariffs are reversed. Not many relocate expensive plants based on tariffs and if they do it may take years not months.

Good news for consumers....not so good for US oil producers....

U.S. oil prices continued to sink Wednesday morning, falling to about $56 a barrel as China said it would match President Trump’s tariffs blow for blow.

The slide in crude prices signals deteriorating confidence in the strength of the economy. And while lower oil prices benefit consumers by, ultimately, reducing prices at the pump, they are a big problem for U.S. oil producers, many of which will struggle to make money drilling new wells at these levels.

...if prices fall further, to around $50 a barrel, U.S. oil production could decline by about 8 percent in a year, according to S&P Global Commodity Insights.

Yarddog said:

The administration's chaos is a disaster for the commodity markets. '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," one executive said.

https://finance.yahoo.com/news/us-oil-executives-see-disaster-192149353.html

Click to expand...

The oil price has fallen below $60. Markets believe Trumps policies will provoke a recession and people buy less oil in a recession. China will be a major beneficiary of a lower oil price America will not. Drill baby drill depends on a high enough price for the product.