It seems like forever that we’ve been enduring conservative’s “DRILL BABY DRILL” mantra. I think it really caught hold when (major oil producing state) Alaska Gov. and ill-fated VP candidate Sarah Palin kept saying it. Boy did it catch on. Frankly, ‘drill baby drill’ sounds more like a title for some cheesy porn movie than an energy strategy but we hear it regularly. Trump of course has made it his own strategy. Dump anything clean energy and DOMINATE the energy industry with U.S. oil. The thing is, oil companies including one that one of his Cabinet members founded struggling. In fact, oil industry professionals are kind of worried!
That’s the thrust of an article from the Washington Post that explores Trump’s promise of ‘Energy Dominance’ that is turning out to be anything but. A case in point is none other than Energy Secretary Chris Wright who was CEO of (fracking) Liberty Energy . Since joining Trump’s Cabinet it’s market value is half what it was. It’s not an isolated case of troubles in the oil and gas industry. It turns out Trump’s agenda has caused challenges in the face of oil supply issues, geopolitical unrest and of course Trump tariffs.
After three months of Trump 2.0 the price of oil has fallen below $65 a barrel which is what’s needed to be profitable. Companies are holding off on drilling new wells for fear of losing money while at the same time what we think of as OPEC countries are increasing production creating an oil glut. Things have gotten to the point that the number of active wells in Texas is lower than since the country was coming out of the pandemic. Remember all that cheap gas? It was because people weren’t driving. Ergo we had more oil than we were using so production oil fields went down back then.
I’d say it’s cause for concern we are seeing something similar now – production decreasing because it’s not needed and therefore not profitable. Add in the cost of the tariffs since so much of the drilling equipment is imported, as well as other energy related materials and equipment and it’s no wonder energy executives are freaking out. Ok, maybe not freaking out but seriously worried at least:
“It is truly affecting everybody,” said T. Grant Johnson, president of Lone Star Production Company, an oil exploration firm in Texas. “There was a lot of talk of, ‘drill baby, drill.’ But these companies are not going to drill if the economics aren’t there. All this fear and uncertainty is causing people to be far more cautious.”
He warns the challenges threaten political blowback for Trump.
“If this pain runs too long and spills into the midterm elections, it could become very uncomfortable for the people who got us here,” said Johnson, who chairs the Texas Independent Producers and Royalty Owners Association. “And this would all be for naught.”
As I said earlier it’s not just oil and gas companies being affected. However the impact on what we think of as Big Oil, traditional energy is undeniable. They were licking their chops at the prospect of a second Trump Presidency. Now? Could the oil executives be started to experience what other Trumpty supporters are feeling as in Buyer’s Remorse? One ugly thought emerged after I started writing this. Something was nagging at me and then the light bulb came on. Trump might have WANTED this. Think about it. He doesn’t care jack about all his rank and file MAGAs including what they pay for a gallon of gas. HE doesn’t worry about energy costs because U.S. taxpayers pay all HIS for him!
What he does care about is money flowing into his pocket. What I remembered was an ugly incident came to light last year regarding Trump and top oil executives. Don Cornholeone flat-out tried to extort them. He met with the top ones and demanded they collectively cough up a billion dollars. And donate to him ‘for his campaign.’ His campaign. Sure. Maybe they took a good look at Trump and thought ‘this dude PAINTS HIS FACE ORANGE’ and both individually and collectively figured this was NOT someone to do that level of business with. Plus, these are guys who have their own histories of screwing people over so they knew damn well the bribe Trumpty was demanding would go mostly to him rather than to defray campaign expenditures.
Trump as you know never forgives a slight. He had to have been pissed those executives didn’t grovel, begging him to take their money. Even worse they made some donations over time but a mere pittance compared to the BILLION dollar bribe he demanded in return for favorable treatment. Am I the only one who thinks it’s possible Trump vowed to get some payback, and had some of his team figure out how to screw the oil and gas industry? In my not so humble opinion it’s worth considering. No one of course is surprised at Trump doing all he can to trash the Clean/Renewable Energy Industry. He doesn’t want to do that to the oil industry of course, but he’s just fine and even eager to make them suffer some. And if Americans of all stripes have to suffer as a consequence TRUMP DOESN’T CARE!
Gas prices haven’t dropped anywhere near the way Trump said he’d make happen. It was just another ‘On Day One’ bullsh*t promise he had no intention of trying to keep. He of course takes credit for the current price being what it is which frankly isn’t all that high as the linked WaPo article notes. You should make time to read it before it goes behind their paywall. There’s plenty to digest but you can either become informed or hide your head in the sand. There are some sobering observations including:
“Those gas prices are not going to make the economy blossom if they are low because of broader economic weakness,” said Kevin Book, managing director at ClearView Energy Partners, a research firm. “It is not all about the price. It is also a matter of why the price is low.”
Book said that any gains the industry made through all the regulatory changes Trump ordered – including gutting pollution rules, eliminating climate policies and rolling back endangered species protections — are being more than offset by the market disruptions his policies are magnifying.
It seems the old-school industry executives are getting bit in the ass by the old saying about ‘Be careful what you wish for.’ And word is getting out. Kevin Book isn’t the only one of his ilk going on the record with that kind of talk:
The mood in West Texas, said D. Kirk Edwards, an oil and gas executive and former chair of the Permian Basin Petroleum Association, is eerily like it was when the pandemic first hit, when oil prices plunged and companies stopped drilling.
“I think we are going to see within 30 to 60 days a lot of the rigs running today idled,” he said. “Most people are in shock at how this can happen with a Republican administration.”
I was forced into early retirement on disability and am into my senior citizen years. With a limited income, I can’t afford the repair costs to get my 1999 Camry running again so the cost of gas doesn’t hit me the way it does others. However, as the linked article explains it’s a lot more complicated than the cost of a barrel of oil or a gallon of gas, or a cubic yard of natural gas. The effects will spread through our economy like a virulently metastasizing cancer popping up in unexpected places. It’s hitting me and I’ll bet you too. Remember, a lot of people work in energy production whether it’s oil and gas or renewable energy and the cutbacks mean a huge number of well-paid people will have way less money to spend. That means money NOT circulating through local and state economies. Ripple effects and not the good kind.
Trump has already injected the cancer cells so problems are coming. The question is whether the hints of pulling back, looking for ways out of the mess he’s created turn into action. That Trump will ‘disconnect the IV’ and allow doctors to start treating the effects of what’s already been unleashed.
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“…are being more than offset by the market disruptions his policies are magnifying…”
Throwing people out of work sure reduces demand for driving.
Oooofffffff. Yet another thing I’ve been oblivious to, and talk about embarrassed!! I knew the whole “drill, baby, drill” bit had faded from the news rather quickly, but I had no idea it was *that bad*. I hadn’t heard about the oil glut, either. As always, thank you for a FANTASTIC column!
Also, I just noticed the looks on the faces of the people to the left in the background of the picture. It’s complete boredom 😉
Just another grandiose, bogus idea that never quite materializes.