Executives from some of the world’s top oil and gas producers offered full-throated support for President Donald Trump’s “Energy Dominance” on Monday, even as financial markets slumped on broader concerns about his economic agenda.
The hallways and sessions on the first day of the annual CERAWeek by S&P Global conference in Houston were filled with buzzy chatter and the vibes of an industry that’s looking forward to an upswing.
Chevron Corp. Chief Executive Officer Mike Wirth told delegates the conversation around climate change and energy production is headed for a “reset.” Shell Plc boss Wael Sawan boasted of a “long runway” ahead for natural gas demand, while Saudi Aramco CEO Amin Nasser said the flaws in the energy transition have been exposed.
But as the executives spoke, New York oil futures dropped to a six-month low, while US equities were hammered amid tariff-driven anxiety. The moves underscore how Trump’s push for US fossil fuel hegemony risks bumping up against the economic repercussions of the trade war set in motion by his administration.
US Energy Secretary Chris Wright defended Trump’s agenda.
“Uncertainty is unsettling and that leads to a loss of confidence — that leads to fear,” he said in an interview with Bloomberg Television’s Alix Steel. “But look, life is long. This administration has been in 50 days.”
“There’s so much positive going on, but yes, you’re seeing the sausage making up close and personal. At the end of the day, we want to lower costs for Americans,” Wright said. “You’ve got to give it a little bit of time.”
On Tuesday, oil prices crawled back from its lows, recovering as a slide in global markets showed signs of abating. West Texas Intermediate traded above $66 a barrel.
The US fossil fuel industry is key to Trump’s promise of a new “golden age” for the world’s biggest economy. His administration represents a rare opportunity for oil and gas companies to lock in permitting for everything from drilling leases to liquefied export terminals.
But the reality is likely to be less than straightforward. Trump’s trade tariffs are set boost prices for steel used in oil and gas pipes. Action on immigration threatens to limit the supply of workers. Crude prices are down roughly 15% since Trump was inaugurated on Jan. 20, which will make it harder for even aggressive producers to lift output as margins get compressed.
“If we are becoming a little more nationalistic — and I’m not saying that’s a bad thing — but it does resonate with me that it’s going to have elevated inflation,” said Larry Fink, CEO of BlackRock Inc. Deportations are going to have “severe impacts” on the construction sector, he said. “I’ve even told members of the Trump team that we’re going to run out of electricians.”
Gas-fired power generation is of particular concern given it’s likely importance in underpinning the build-out of data centers for artificial intelligence. Even before the most recent tariffs, the cost of building gas power generation has gone up threefold in recent years due to the long-lead times on turbines, slow permitting, and a shortage of labor, said NextEra Energy Inc. CEO John Ketchum.
“It’s all of the above: We need renewables, we need gas, we need nuclear,” said Ketchum, who wants the US to maintain Biden-era tax credits for renewables projects.
“It’s all going to come in at different times and it’s all going to come in at different cost profiles, but let’s not just go and make decisions that force us into one technology,” he said in an interview.
The oil and gas industry’s top lobbyist is confident he can achieve carve-outs from Trump’s tariff policy by making the case that imported steel and tubular goods will boost domestic energy production. US liquefied natural gas export capacity is on course to expand 60% by 2027, requiring a lot of imported steel.
“The president and his team fully recognize to help meet the energy dominance agenda you’re going to need a trade agenda that falls within that frame as well,” Mike Sommers, CEO of the American Petroleum Institute, said in an interview. “There certainly is some uncertainty but there’s uncertainty with every administration.”
Even with the uncertainty, oil producers including Chevron and Shell welcomed the the Trump administration’s pro-growth agenda, contrasting it with what they perceive as overly stringent regulatory and climate stances by the Biden administration and in Europe’s political circles.
“There’s no question the narrative is changing,” Sawan said.
