President Trump’s promise during last year’s election to facilitate the pending of oil and gas executives who believed that his policies would reduce their costs and help them make more money.
These hopes are fading now. Thanks to Mr Trump’s invoices, the oil and gas industry disputes increasing prices for basic materials such as steel pipes used to align new wells.
This has not yet been translated into a substantial change in American drilling or production expectations, but companies have begun to review budgets to reflect the highest cost of materials. Decisions made today on which wells for drilling will affect production many months from now.
Petroleum refineries are separate for a Canadian oil invoice, which some of them have to produce gasoline, diesel and other fuels.
At the same time, consumers have grown up for the economy and the price of oil has decreased about 10 percent shortly before Mr Trump has duties, to about $ 70 a barrel. Petroleum companies tend to pierce less when prices decrease.
The combination could complicate Mr Trump’s desire to juice of American oil and gas production, which are already high or near a record.
“Our ability to” drill, baby, drill “is directly linked to the finances of the well,” said Lori Blong, Mayor of Midland, Texas, who is at the heart of the most productive US oil basin. “We cannot pierce ourselves in a commitment.”
A planned 25 % invoice to imported steel, which will come into force on 12 March, is very consequent for US oil and gas producers, whose wells often stretch miles on Earth. The steel they use to align these holes can represent 10 percent of total costs.
Mr Trump said in early February that he would impose steel and aluminum invoices. The price of the steel tube has already increased before this announcement and has been climbed since.
The steelworker used in wells was 10 percent more expensive on average in February than in October, according to an Argus media price index, which reflects domestic and imported products. The type of tube used to move oil and gas across the country also costs more than last fall. Both products remain less expensive than they came out of the pandemic, when the supply chain disorders sent the prices that go up throughout the economy.
The lifting resources, a private oil and gas producer in western Texas, are among those who face a big jump in costs. Since the end of February, the company is expected to pay about 30 % more for the pipe it uses to align the wells, in part because a less expensive variety is no longer available.
“When Trump announced the invoices, a switch inhibits availability and pricing,” said Steve Pruett, Managing Director of Elevation.
This has not yet caused lifting to change the drilling plans for this year, but “it’s a zero sum game,” Mr Pruett said. “If you have a fixed budget and the wells cost more, then you will drill fewer wells.”
The United States is also planned on Tuesday to start charging invoices for the energy imported from Canada and Mexico, threatening oil refineries – and possibly causing prices in the pump to increase. These contributions came into force in early February, but Mr Trump put them for a month.
The White House did not respond to a request for comments. Mr Trump has downgraded concerns about the potential financial risks of invoices, saying that the benefits “will be worth all the price to be paid”.
Mr Trump’s term is only one month and the full results of his policies will become clearer in the coming months and years. The cost of materials is one of the many variables that determine how much profitable oil companies they are. Overall, drilling and fracking rates have been reduced Because companies have become more effective. Oil prices could also swing on the basis of geopolitical developments, including a peace agreement between Russia and Ukraine, pressed by Mr Trump.
Trump’s administration has already helped the oil and gas industry in some ways. In February, the body of the Army engineers moved to accelerate the license for oil and gas projects. The energy section signed a proposed gas export installation on the coast of the vagina that had been waiting for a green light for several years. President Joseph R. Biden younger stopped exporting gas that allows January 2024, a move to environmental groups, but upset oil and gas companies.
Natural gas prices were also much higher than it was this time last year, partly because it was quite cold in many parts of the country, making some optimistic executives more profitable to produce fuels.
Still, in energy, as in other parts of the economy, executives say they are facing significant uncertainty because it is so difficult to predict Mr Trump’s actions.
“What do you react? Which direction are you going? This is part of the dilemma, “said Taylor Potts, West Texas Sales Manager for B & L Pipeco Services, who has and distributing a steel pipe into oil and gas companies.” You don’t know if all bets next week is disabled. “
The early effects of prices associated with prices are felt uneven.
Liberty Energy, which Fracks Wells for many large US oil companies, has not yet seen invoices affecting its customers’ production plans, said Ron Gusek, Liberty’s chief executive. Fracking involves taking sand, water and chemicals in high pressure wells to unlock oil and gas. Mr. Gusek’s predecessor, Chris Wright, is Mr. Trump’s energy secretary.
“My guess is that you will hear a different story depending on the operator’s scale,” Mr Gusek said, while on the way to visit the wells that Liberty was running out of Denver.
If invoices are increasing costs further, oil and gas producers are more likely to reduce drilling and fracking than more, Mr Gusek said. “They will eventually pass the same amount of dollars,” he said. “It may conclude that they achieve less work as a result.”
This is partly due to the fact that investors want oil and gas companies to operate conservatives.
After Mr Trump said in February that he would place 25 percent invoices for steel and aluminum, the chief financial director of Devon Energy, a larger producer of oil and gas based in Oklahoma City, said that the company said.
“We feel very well that it will have a small impact on us at this point,” said analysts by Jeff Ritenour, head of financial director at a recent teleconference. Mr Ritenour also said that Mr Trump’s commercial policy was a moving goal.
On Thursday, Mr Trump said the goods imported from China would be subject to an additional 10 % invoice, in addition to 10 % of the duties in early February.
There is some indications that oil activity can take.
In January, the Mark Waters oil supply company in West Texas had the best month in its eight years. Revenue has reached $ 1.3 million, over 40 % since January 2024.
And yet Mr Waters, who described himself as “a great supporter of Trump”, expressed some stress.
“We have been developed under the Democrats,” Mr Waters said of the oil operation. “You think it would be the opposite because Republicans are so over-energy. But it never worked in my career in this way.”
