The threat of tariffs. Increased economic uncertainty. And it's pushing for much lower crude oil prices.
Due to all their bravery over the US energy domination and enthusiasm for deregulation, American energy executives are beginning to worry about President Trump's agenda.
Their concerns came together this week for a conversation in hotel rooms and industry big names, the most important annual meeting.
Certainly, some wanted the president to cut off the tariff breaks on the oil and gas companies. Certainly, the administration was not serious about lowering oil prices by another 25%. Certainly, the confusion of the past two months has passed quickly.
And as soon as those faint lights of frustration and doubt slipped off, they vanished, celebrating Trump, his cabinet, and the administration's purpose to unleash American energy companies, at least the administration that produces oil, natural gas and nuclear companies.
This is the delicate dance of the energy industry these days. Companies are trying to balance the fight for profits, including free trade, along with a strong desire not to anger the president. The oil and gas industry spent more than $75 million to elect Trump.
“We hope that as we continue these conversations on trade, the energy control agenda will become more important than the tariff agenda,” said Mike Sommers, CEO of the American Petroleum Institute, a leading trading group in the oil and gas industry.
Oil and gas executives are scheduled to meet with Trump at the White House next week.
“There's a lot of uncertainty right now, and I understand the anxiety about all of that,” Trump's energy secretary Chris Wright said in an interview with The New York Times, which met with energy executives this week. “But I think we're going to go to a very good place.”
Just this week, a 25% tariff was effective on imported aluminum and steel. Both were widely used in the energy industry. Trump also said he would charge a terrible fee on metals he purchased from Canada a few hours later after securing concessions.
Tariffs and economic concerns were the main reason the S&P 500 Index fell 10.1% from its recent high on Thursday. US oil prices settled at $66.55 per barrel, down nearly 15% from just before Trump took office.
Peter Navarro, a White House aide who has long advised Trump on trade, has publicly imagined crude prices dropping to $50 a barrel. According to the Federal Reserve Bank of Dallas, in most US oil fields, companies typically require prices above $60 per barrel to make money in new wells.
“You're not going to find anyone in the industry to criticise the Trump administration,” said Scott Sheffield, who sold his large oil company, Pioneer Natural Resources, to Exxon Mobile last year.
Instead, Sheffield asked Trump questions. Does he know the impact? What can the industry do? ”
The executives still managing or representing the company were generally not so dull. Many praised Trump and his cabinet's choices and expressed support for the “all above” approach to developing energy.
“It's refreshing,” said Toby Rice, CEO of natural gas producer EQT, who attended dinner, and then Wright and Secretary of the Interior Doug Burgham had it along with the energy executive. “It's very clear that this administration is focusing on lowering consumer energy bills.”
Sometimes people are scattered with milder demands of greater certainty and less volatility.
“I'm going to say this in about two and a half seconds and move on. We need a common sense trade policy,” said Jay Timmons, chief executive of the National Association of Manufacturers, after breakfast near the meeting. Many laughed as Timmons quickly returned to his more comfortable territory.
His trade group is looking for the White House to more predictability and time to adapt to new trade policies. Many manufacturers are often dependent on importing parts and raw materials, and are concerned about tariff retaliation by other countries, causing them to worry about rising costs.
Ryan Lance, chief executive of Conoco Phillips, one of the nation's largest oil and gas producers, said he views energy as the “poster child” of Trump's efforts to create jobs and bring manufacturing back to the United States.
“I hope they will keep that in mind as they think about what they are going to do on the customs side,” Lance said. “I think it's something people should see whether you exempt energy or not.”
Trump is moving back and forth between plans to tax energy from Mexico and Canada. The US is particularly heavily dependent on Canadian oil, and refineries combine with domestic crude oil to create gasoline and diesel fuel.
Other executives were more optimistic about trade policy.
“There's concern about tariffs,” said Abigail Ross Hopper, who heads the Solar Energy Industry Association. “But it's not a full-fledged panic like the beginning of the first Trump administration.”
In 2018, during his first term, Trump placed a 30% tariff on imported solar cells and modules, the building blocks of panels that turn sunlight into electricity.
Like other renewable energy leaders, Hopper tried to frame her sector with words that might resonate with the Trump administration.
“There's nothing unique about solar manufacturing,” Hopper said. “It's like making pencils. If you don't need them anymore, the pencil maker will go out of business.”
Many energy companies are turning to lowering barriers to ensuring permits for pipelines, power lines and other infrastructures that are extremely difficult to build in many locations.
Williams, the chief executive of the pipeline company, said the tariff-related price increases were pale compared to the costs and risks associated with permits.
“If we can pay 25% in the pipe to get permission, we'll get that trade all day,” Armstrong said.
Ivan Penn contributed to the report from Houston.
