Oil is trading at its lowest level in almost four years. Costs are rising. And Wall Street is even more worried by the day President Trump's trade policy brings the US into a recession.
The oil patch response? Silence, almost.
The oil and gas executives who are eager to remain Trump's good bounty have offered little public criticism of the presidents and tariffs he has unfolded over the past few months. However, in his private life he denounced the uncertainty he owned, including a recent anonymized investigation by the Federal Reserve Bank of Dallas.
If US oil prices drop below $60 a barrel around where they were traded Monday, businesses could be forced to delay drilling, cut expenditures and fire workers by possibly hurting states like Texas.
Oil executives have donated millions of dollars to help Trump elect his industry defender. But if the past few days are some indicators, then we have only ever had a friendly ear in the White House.
“Everyone is afraid,” said Dan Pickering, chief investment officer at Pickering Energy Partners, a Houston financial services company.
Executives from other industries, including finance and technology, who work closely with Trump, are urging the president to ease his trade policy.
Trump says he wants to reset the business relationship he has long described as unfair to the US.
Energy sector spokesman Ben Mortlich said in a statement that the administration's policies “help American consumers, reduce the regulatory burden on energy producers, and are costly to operate in the US.”
Soon after Trump took office, the oil industry urged him to reconsider tariffs on oil in Canada and Mexico. Trump primarily reversed the course and exempts energy from tariffs announced last week.
Still, oil prices are falling sharply, just like energy company stocks. By the end of Monday's trading day, shares in ExxonMobil and Chevron, the largest oil companies in the United States, had fallen about 13% and 16% since Wednesday, when Trump announced the latest tariffs. Neither company made its CEO available for interviews.
Small businesses were getting worse. Shares of Liberty Energy, the Denver fracking company previously led by energy secretary Chris Wright, had fallen about 35%.
It exacerbated the impact of Trump's trade policy, and the cartel, known as OPEC Plus, last week decided to pump more oil from May. It raises concerns that supply will outweigh demand and can become weaker as the global economy slows down.
“You're probably at one point in every c-suite in our sector, and it's getting their attention,” said Tom Jorden, chief executive of Coterra Energy, one of the largest oil and gas producers in the United States, on Friday that oil won for around $62 a barrel.
Jorden asked him what he thought of the tariffs that sent the global market into the spiral. “I don't have it,” he said. “I understand that the president is choosing to do the hardest things first.”
Others encouraged patience.
“We chose him knowing this was coming, right?” said Michael Oestmann, president of a small oil and gas company at Tall City Exploration IV in western Texas. Ostman said he hopes the market will bounce back soon.
“We need to see at least how it goes over the next few weeks,” he said.
Personally, executives have expressed more instability. Anonymous responses to the Dallas Fed's oil and gas company's March survey were littered with complaints about uncertainty and rising costs for materials such as steel, which are subject to a 25% tariff.
“In my entire career of over 40 years, I have never felt any more uncertainty about our business,” one respondent wrote.
Another stability was sought: “The disruption of the regime is a disaster for the commodity market. “Drills, babies, drills” are nothing more than a rallying cry of myths and populists. Customs policy is impossible to predict and does not have clear goals. ”
When oil executives are pushed back, the administration wants low oil prices as $50 a barrel, in response to the idea that it is often floating around by White House aide Peter Navarro.
“When you reach the $50 oil you mentioned, you're below the point that you're going to drill, baby, drill,” one of Trump's biggest oil industry advocates told Bloomberg last month.
It will take some time for the recent oil price slides to rise as low prices at the pump. According to the AAA Motor Club, regular gasoline gallons averaged around $3.26 on Monday, a slight rise from last week.
Natural gas prices have become more resilient due to rapid market changes, insulating some companies. Still, some people expressed concern that more countries would follow China's lead in retaliation with sudden tariffs on US exports, including liquefied natural gas. If China's latest tariffs take effect as planned this week, US gas will face almost 50% tax.
“We're committed to providing a great deal of energy and energy,” said Matt Kurzejewski, CEO of Costy's Energy Services, a Pennsylvania-based gas services company.
But for now, Kurzejewski has described himself as “cautiously optimistic” about Trump's policies.
