At the recent “Spring Swing” golf tournament hosted by the Permian Basin Petroleum Association, the conversations among Texas oil executives extended beyond the usual frustrations of missed putts and lost golf balls. Their primary concern was the significant decline in oil prices, attributed to the president they had supported.
The downturn in the market, triggered by President Donald Trump’s trade policies, is affecting nearly every sector of the economy. However, few industries are feeling as discontented as the U.S. shale oil sector. Over the past 15 years, this industry has positioned America as the leading crude oil producer, reduced energy costs, and spurred growth in petrochemical and natural gas exports. It also played a crucial role in Trump’s election campaign.
Despite this, half of the 20 worst-performing stocks on the S&P 500 Index since Trump announced his tariffs on April 2 belong to the oil, gas, and petrochemical sectors, with crude prices dropping to their lowest levels in four years.
“I can’t think of an industry that was more supportive of Trump than oil and gas,” remarked Kirk Edwards, a former chairman of the Petroleum Association, who attended the tournament in Odessa, Texas, located in the heart of the Permian Basin, surrounded by pumpjacks. “People are stunned by how quickly he can drive oil prices down.”
The rising anxiety among industry leaders highlights how Trump’s attempts to reshape global trade are counteracting his ambitions to boost U.S. fossil fuel production and achieve “energy dominance.” Executives are hesitant to increase U.S. oil output with West Texas Intermediate prices down approximately 23% since Trump took office less than three months ago, currently sitting below $60 a barrel—below the threshold necessary for new wells to be profitable, as indicated by a survey from the Federal Reserve Bank of Dallas.
Adding to their woes, OPEC and its allies last week pledged to triple a production increase previously scheduled for May. The cartel announced it hours after Trump unveiled his tariffs.
On the campaign trail last fall, Trump said he didn’t care if oil companies drilled themselves out of business as long as prices fell. Now, as oil executives watch plunging prices with alarm, Trump is gleefully celebrating the fact. Gasoline, he predicts, could fall to the lowest level in years.
“It’s going to be in the $2.50-a-gallon range — and maybe below that,” Trump told reporters Monday in the Oval Office. “We’re really doing amazing. I mean, we’re cutting prices.” Gasoline prices are still well above $2.50 in most of the U.S. But the fact that the president is cheering on a further decline doesn’t sit well in the oil patch.
Several senior oil executives, who asked not to be identified criticizing the president as the trade fight plays out, expressed frustration with Trump for continually talking down the price of their key commodity, while also expressing appreciation for his push to cut regulations, ease permitting and make more federal land available for exploration.
Even before Trump announced the tariffs and helped triggered the price collapse, oil executives were privately grumbling about his trade policy. In the March 26 survey by the Federal Reserve Bank of Dallas, shale executives submitted a raft of blistering anonymous comments criticizing the president’s tariff agenda, with one calling it “a disaster for the commodity markets.”
US crude futures fell for a fourth-consecutive trading session Tuesday, dropping to $59.58. It was the first time WTI closed below $60 a barrel since 2021.
SOURCE: Bloomberg News