Dems and Fossil Fuel Execs Agree on One Thing: Hating Donald Trump

While fossil fuel companies are reliably Republican—and strongly backed Trump’s reelection campaign—his half-baked plan for “U.S. energy dominance” could hurt their bottom line. Much of the oil produced in the United States is extracted through fracking and other “unconventional” means. These are relatively expensive ways to drill for oil and gas, requiring big, frequent injections of cash. Drilling as much as possible as quickly as possible—what the Trump administration says it wants to do—threatens to flood the market, driving down prices at the pump. Lower fuel costs might be welcome news for consumers but also mean that drillers, especially small and midsize firms, which operate on tighter margins than big players like ExxonMobil or Chevron, could find it more difficult to break even. You don’t have to take my word for it, though. Executives are fuming. “The rhetoric from the current administration is not helpful,” one commented. “If the oil price continues to drop, we will shut in [i.e., decrease] production.”

Houston C-suiters are particularly worried about prices amid rising interest rates and production costs. Trump’s tariffs on steel, especially, are pushing those costs even higher. According to one survey respondent, the tariff announcement “immediately increased the cost of our casing and tubing by 25 percent even though inventory costs our pipe brokers less. U.S. tubular manufacturers immediately raised their prices to reflect the anticipated tariffs on steel.”

Making matters worse is the fact that no one seems to know which tariffs will be in place a week or a month from now; the White House continues to announce tariffs, back down from them, then announce even steeper ones at a rapid clip. Broader uncertainty about where the economy is headed—and oil demand and prices along with it—is anathema to energy investors who want to be sure that the money they pour into drilling will deliver returns.