President Trump is making major shifts in U.S. energy policy in favor of fossil fuels, but oil and gas companies are worried that these changes will force them into the new drilling frenzy that Trump wants. It claims that there is no.
The oil industry is excited about Trump's executive orders aimed at making it harder for renewable energy companies to operate and easier for oil, gas and pipeline businesses. But on the key question of whether his policies will lead to increased production of oil and gas, one of Trump's central goals, industry executives say they won't unless prices rise significantly. The president says he does not support it.
Trump's aim is to help oil and gas by loosening rules governing the extraction, transportation and export of the fuel, while overwhelming competitors such as wind turbines, electric vehicles and other low-emissions technologies. . While this is a strong market signal, it is not enough for companies to “drill, baby, drill.”
“What you're seeing is a very positive attitude,” said Ron Gusek, president of oilfield services company Liberty Energy. The company's CEO was selected by Trump to lead the Department of Energy. “But it's too early to say that that will translate into actual changes in activity levels here in North America.”
Oil and natural gas prices will need to rise for drilling and fracking to rebound significantly, executives say, a result that could undermine Trump's goal of stemming inflation by lowering energy costs. It is incompatible with Oil companies will not be willing to spend money on production, which is already near record levels in the United States, unless they are confident they can profit from the excess fuel they produce.
Further complicating the president's efforts to boost domestic production is that the industry as a whole is more focused on reining in spending than in his first term. Wall Street firms used to invest in hydraulic fracturing companies that grew rapidly. Investors now want to support profitable businesses.
An index of U.S. oil and gas companies lost about 3% in value last week as crude oil prices fell below $75 a barrel. On Monday, the index fell further as oil prices fell below $73 per barrel. Natural gas prices, which often rise in the winter, have soared in recent days as much of the country struggles with frigid weather.
Still, there are early signs that markets are reacting to some of Trump's statements and orders.
Ben Dell, managing partner at energy investment firm Kimmeridge, said prospects have shown more interest in signing long-term contracts for U.S. gas exports since Mr. Trump's election.
“People want to get to the front of the line on contracts for U.S. products early to avoid the threat of potential tariffs,” Dell said. His company owns a majority stake in Commonwealth LNG and is awaiting federal approval for the proposed gas. -Export plant on the Gulf Coast.
Trump's declaration of a national energy emergency, along with other executive orders, amounts to a promise to test the limits of presidential power to keep fossil fuel demand strong. This is a significant shift from his predecessor's policy, which aimed to move the country away from fuels, a major cause of climate change.
On his first day in office, Trump directed the Department of Energy to reinstate review permits for gas export facilities that President Joseph R. Biden had suspended, but a federal judge later ordered the government to lift the suspension. commanded. The president also threatened to impose tariffs on a wide range of trading partners, including close U.S. allies Canada and Mexico. (Depending on how such a levy is formulated, it could have an extremely disruptive impact on the oil and gas industry, a highly global industry dependent on imported raw materials and fuel.)
The consequences of Mr. Trump's pro-fossil fuel policies will become clear over the coming months and years. If anything, the past decade has reminded us that there are limits to what presidents can do to support or hinder various energy sources.
U.S. oil and gas production has increased to record highs under Mr. Biden, even as Mr. Biden has sought to push the country toward cleaner alternatives. Trump's efforts in his first term to champion “clean, beautiful coal” were no match for cheaper natural gas, which ultimately outperformed coal on the market. U.S. coal consumption fell by more than a third during Trump's first term, according to federal data.
The executive order Trump signed last week lays out a roadmap to make oil and gas production easier and cheaper, while making it more difficult and cheaper to build equipment that helps people reduce their use of fossil fuels. Be more expensive.
He ordered federal agencies to halt issuing leases and permits for all new wind projects until a new environmental review is conducted. The Interior Department then froze approvals for new solar arrays and other renewable energy projects on public lands for 60 days.
In another executive order, Trump defined energy to include oil, coal, natural gas, nuclear, geothermal and hydroelectric power, but explicitly excluded wind turbines and solar panels. He also called on the agency to stop distributing funds set aside by Congress for items such as installing fast-charging stations along highways. Legal experts say the president cannot stop spending authorized by Congress.
But some green energy investors have already exited. After Trump won the November election, German company RWE announced it would cut spending on U.S. offshore wind development, citing increased risks for new projects in the country.
In the oil and gas industry, companies are particularly encouraged by Mr. Trump's pledge to make it easier to build pipelines, but new legislation must be passed in Congress and opponents could raise objections to block the project. It is likely to take many years to realize this. In court.
Currently, it is especially difficult to build pipelines that cross state lines. Companies have largely abandoned building long-distance pipelines in the Northeast after early projects faced costly lawsuits and opposition from state and local officials.
As a result, there are limits to how much natural gas companies can move from Appalachia, one of the nation's richest gas regions, curtailing production in states like Pennsylvania and driving down local prices. There is. Gasoline is generally much more expensive in places like Boston, which is hundreds of miles away.
“Our focus is on very long-term, permanent permitting reform that will allow us to build things responsibly here in the U.S.,” said Alan Armstrong, Williams CEO. (CEO) said. Japan's largest natural gas pipeline operator.
brad plummer Contributed to the report.
