\n<\/p>\n
With clean energy more cost-competitive than it once was, the White House\u2019s oil-first strategy is faltering in a changing energy landscape.<\/p>\n
\u201cWe will drill, baby, drill,\u201d President Donald Trump declared at his inauguration on January 20. Echoing the slogan that exemplified his energy policies during the campaign, he made his message clear: more oil and gas, lower prices, greater exports.\u00a0<\/p>\n
Six months into Trump\u2019s second term, his administration has little to show on that score. Output is ticking up, but slower than it did under the Biden administration. Pump prices for gasoline have bobbed around where they were in inauguration week. And exports of crude oil in the four months through April trailed those in the same period last year.\u00a0<\/p>\n
The White House is discovering, perhaps the hard way, that energy markets aren\u2019t easily managed from the Oval Office \u2014 even as it moves to roll back regulations on the oil and gas sector, offers up more public lands for drilling at reduced royalty rates, and axes Biden-era incentives for wind and solar.\u00a0<\/p>\n
\u201cThe industry is going to do what the industry is going to do,\u201d said Jenny Rowland-Shea, director for public lands at the Center for American Progress, a progressive policy think tank.\u00a0<\/p>\n
That\u2019s because the price of oil, the world\u2019s most-traded commodity, is more responsive to global demand and supply dynamics than to domestic policy and posturing.\u00a0<\/p>\n
The market is flush with supplies at the moment, as the Saudi Arabia-led cartel of oil-producing nations known as OPEC+ allows more barrels to flow while China, the world\u2019s top oil consumer, curbs its consumption. Within the U.S., a boom in energy demand driven by rapid electrification and A.I.-serving data centers is boosting power costs for homes and businesses, yet fossil fuel producers are not rushing to ramp up drilling.\u00a0<\/p>\n
There is one key indicator of drilling levels that the industry has watched closely for more than 80 years: a weekly census of active oil and gas rigs published by Baker Hughes. When Trump came into office on January 20, the U.S. rig count was 580. Last week, the most recent figure, it was down to 542 \u2014 hovering just above a four-year low reached earlier in the month.\u00a0<\/p>\n
The most glaring factor behind this stagnant rig count is the current level of crude oil prices. Take the U.S. benchmark grade: West Texas Intermediate crude. Its prices were near $66 a barrel on July 28, after hitting a four-year low of $62 in May. The break-even level for drilling new wells is somewhere close to $60 per barrel, according to oil and gas experts.\u00a0<\/p>\n
That\u2019s before you account for the fallout of elevated tariffs on steel and other imports for the many companies that get their pipes and drilling equipment from overseas, said Robert Rapier, editor-in-chief of Shale Magazine, who has two decades of experience as a chemical engineer.\u00a0<\/p>\n
The Federal Reserve Bank of Dallas\u2019s quarterly survey of over 130 oil and gas producers based in Texas, Louisiana, and New Mexico, conducted in June, suggests the industry\u2019s outlook is pessimistic. Nearly half of the 38 firms that responded to this question saw their firms drilling fewer wells this year than they had earlier expected.\u00a0<\/p>\n
Survey participants could also submit comments. One executive from an exploration and production company said, \u201cIt\u2019s hard to imagine how much worse policies and D.C. rhetoric could have been for U.S. E&P companies.\u201d Another executive said, \u201cThe Liberation Day chaos and tariff antics have harmed the domestic energy industry. Drill, baby, drill will not happen with this level of volatility.\u201d\u00a0<\/p>\n
Roughly one in three survey respondents chalked up the expectations for fewer wells to higher tariffs on steel imports. And three in four said tariffs raised the cost of drilling and completing new wells.\u00a0<\/p>\n
\u201cThey\u2019re getting more places to drill and they\u2019re getting some lower royalties, but they\u2019re also getting these tariffs that they don\u2019t want,\u201d Rapier said. \u201cAnd the bottom line is their profits are going to suffer.\u201d<\/p>\n
Earlier this month, ExxonMobil estimated that its profit in the April-June quarter will be roughly $1.5 billion lower than in the previous three months because of weaker oil and gas prices. And over in Europe, BP, Shell, and TotalEnergies issued similar warnings to investors about hits to their respective profits.<\/p>\n
These warnings come even as Trump has installed friendly faces to regulate the oil and gas sector, including at the Department of Energy, the Environmental Protection Agency, and the Department of the Interior, the last of which manages federal lands and is gearing up to auction more oil and gas leases on those lands.<\/p>\n
\u201cThere\u2019s a lot of enthusiasm for a window of opportunity to make investments. But there\u2019s also a lot of caution about wanting to make sure that if there\u2019s regulatory reforms, they\u2019re going to stick,\u201d said Kevin Book, managing director of research at ClearView Energy Partners, which produces analyses for energy companies and investors.\u00a0<\/p>\n
The recently enacted One Big Beautiful Bill Act contains provisions requiring four onshore and two offshore lease sales every year, lowering the minimum royalty rate to 12.5 percent from 16.67 percent and bringing back speculative leasing \u2014 when lands that don\u2019t invite enough bids are leased for less money \u2014 that was stopped in 2022.\u00a0<\/p>\n
\u201cPro-energy policies play a critical role in strengthening domestic production,\u201d said a spokesperson for the American Petroleum Institute, the top U.S. oil and gas industry group. \u201cThe new tax legislation unlocks opportunities for safe, responsible development in critical resource basins to deliver the affordable, reliable fuel Americans rely on.\u201d\u00a0<\/p>\n
Because about half of the federal royalties end up with the states and localities where the drilling occurs, \u201cbudgets in these oil and gas communities are going to be hit hard,\u201d Rowland-Shea, of American Progress, said. Meanwhile, she said, drilling on public lands can pollute the air, raise noise levels, cause spills or leaks, and restrict movement for both people and wildlife.\u00a0<\/p>\n
Earlier this year, Congress killed an EPA rule finalized in November that would have charged oil and gas companies for flaring excess methane from their operations.\u00a0<\/p>\n
\u201cFolks in the Trump camp have long said that the Biden administration was killing drilling by enforcing these regulations on speculative leasing and reining in methane pollution,\u201d said Rowland-Shea. \u201cAnd yet under Biden, we saw the highest production of oil and gas in history.\u201d\u00a0<\/p>\n
In fact, the top three fossil fuel producers collectively earned less during Trump\u2019s first term than they did in either of President Barack Obama\u2019s terms or under President Joe Biden. \u201cIt\u2019s an irony that when Democrats are in there and they\u2019re putting in policies to shift away from oil and gas, which causes the price to go up, that is more profitable for the oil and gas industry,\u201d said Rapier.<\/p>\n
That doesn\u2019t mean, of course, that the Trump administration\u2019s actions won\u2019t have long-lasting climate implications. Even though six months may be a significant amount of time in political accounting, investment decisions in the energy sector are made over longer horizons, ClearView\u2019s Book said. As long as the planned lease sales take place, oil companies can snap up and sit on public lands until they see more favorable conditions for drilling.\u00a0\u00a0<\/p>\n
What could pad the demand for oil and gas is how the One Big Beautiful Bill Act will withdraw or dilute the Inflation Reduction Act\u2019s tax incentives and subsidies for renewable energy sources. \u201cWith the kneecapping of wind and solar, that\u2019s going to put a lot more pressure on fossil fuels to fill that gap,\u201d Rowland-Shea said.\u00a0<\/p>\n
However, the economics of solar and wind are increasingly too attractive to ignore. With electricity demand exceeding expectations, Book said, \u201cany president looking ahead at end-user prices and power supply might revisit or take a flexible position if they find themselves facing shortage.\u201d\u00a0<\/p>\n
A recent United Nations report found that \u201csolar and wind are now almost always the least expensive \u2014 and the fastest \u2014 option for new electricity generation.\u201d That is why Texas, deemed the oil capital of the world, produces more wind power than any other state and also led the nation in new solar capacity in the last two years.\u00a0<\/p>\n
Renewables like wind and solar, said Rowland-Shea, are \u201ca truly abundant and American source of energy.\u201d<\/p>\n
\u2014Deep Vakil, Inside Climate News<\/p>\n
Why U.S. Geothermal May Advance, Despite Political Headwinds<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" With clean energy more cost-competitive than it once was, the White House\u2019s oil-first strategy is faltering in a changing energy landscape. \u201cWe will drill, baby, drill,\u201d President Donald Trump declared at his inauguration on January 20. Echoing the slogan that exemplified his energy policies during the campaign, he made his message clear: more oil and<\/p>\n","protected":false},"author":1,"featured_media":13127,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[50],"tags":[710,6522,6822,6821,811],"class_list":{"0":"post-13126","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-environment","8":"tag-boom","9":"tag-drilling","10":"tag-materialize","11":"tag-promised","12":"tag-u-s"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/13126","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13126"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/13126\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/13127"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}