President Trump's promise during last year's elections to make it much easier to drill for oil and gas enthusiastic energy managers who believed that his policy would lower their costs and help them earn much more money.
That hope now fades. Thanks to Mr. Trump's rates, the oil and gas industry fights with rising prices for essential materials such as steel pipes that are used to cover new wells.
That has not yet translated into a meaningful change in the US drilling activities or product expectations, but companies have started revising budgets to display higher material costs. Decisions that were made today about which wells to practice the production will influence production in many months.
Oil refineries are separately brace for a rate on Canadian oil, which some of them need to produce gasoline, diesel and other fuels.
At the same time, consumers have become hunted about the economy and the oil price has fallen by around 10 percent since just before Mr. Trump took office, up to around $ 70 per barrel. Oil companies tend to drill less when prices fall.
The combination can be the indicated wish of Mr. Trump makes it difficult to juice American oil and natural gas production, which is already on or almost record highs.
“Our ability to 'drill, baby, drilling' is directly connected to the economy of the well,” said Lori Bleg, the mayor of Midland, Texas, which is central to the most productive American oil leaks. “We can't drill ourselves in a binding.”
A planned rate of 25 percent on imported steel, which will come into effect on March 12, is very consistent for American oil and gas producers, whose wells often stretch miles in the earth. The steel pipe they use to cover those holes can make up 10 percent of the total well costs.
Mr. Trump said at the beginning of February that he would impose rates on steel and aluminum. The price of steel pipe rose before that announcement and has since risen.
The steel pipe that was used in Wells was on average 10 percent more expensive in February than in October, according to an Argus Media Price index that reflects inland and imported products. The type of pipe that was used to move oil and gas throughout the country also costs more than last fall. Both products remain cheaper than they came from the pandemic, when the disruptions of the supply chain sent the prices about the economy.
Elevation Resources, a private oil and gas producer in West -Texas, is one of that of a big leap in costs. From the end of February, the company expected to pay around 30 percent more for the pipe it uses to lines, partly because a less expensive variety is no longer available.
“When Trump announced the rates, a switch was about availability and prices,” said Steve Pruett, Chief Executive of Elevation.
That has not changed his drilling plans for this year yet, but “it's a zero sum game,” said Mr. Pruett. “If you have a fixed budget and the wells cost more, you will drill fewer wells.”
The United States are also planned on Tuesday to start charging rates for energy imported from Canada and Mexico, which causes oil refineries – and possibly the prices at the pump rise. Those taxes were originally established to come into effect at the beginning of February, but Mr. Trump postponed them for a month.
The White House did not respond to a request for comments. Mr. Trump has traced concern about the potential economic risks of rates and says that the benefits “are all worth the price to be paid.”
Mr. Trump's term of office is only a month old, and the full effects of his policy will become clearer in the coming months and years. The costs of materials are one of the many variables that determine how profitable oil companies are. In general, the rates for drilling and fracking have fallen because companies have become more efficient. Oil prices can also swing on the basis of geopolitical developments, including a peace agreement between Russia and Ukraine, to which Mr Trump insists.
The Trump administration has already helped the oil and gas industry in some ways. In February the Army Corps of Engineers moved to allow oil and gas projects. The energy department signed up on a proposed export facility for nature gas on the Gulf Coast that had been waiting for a green light for several years. President Joseph R. Biden Jr. Paused the export of gas in January 2024, a relocation that appealed to environmental groups, but upset oil and gas companies.
The natural gas prices have also been much higher than this time last year, partly because it has been quite cold in many parts of the country, making some managers optimistic that it will become more profitable to produce the fuel.
Yet managers in energy, just like in other parts of the economy, say that they confront considerably uncertainty because it is so difficult to predict Mr Trump's actions.
“What do you respond to? In which direction do you go? That is part of the dilemma, ”said Taylor Potts, a sales manager based in West-Texas for B&L Pipeco Services, which is in stock steel pipe and distributes oil and gas companies. “You don't know if all bets will be switched off next week.”
The early effects of rate -related price increases are felt uneven.
Liberty Energy, who fracks draws for many large American oil companies, has not yet seen any rates that influence the production plans of its customers, said Ron Gusek, Chief Executive of Liberty. Fracking includes shooting sand, water and chemicals in wells at high pressure to unlock oil and natural gas. The predecessor of Mr. Gusek, Chris Wright, is Mr. Trump's energy secretary.
“My gamble is that you hear a different story, depending on the scale of the operator,” said Mr. Gusek, on his way to visit Wells that Liberty was outside Denver Fracking.
If rates ensure that the costs rise further, oil and gas producers are more likely to scale back drilling and fracking activity than they spend more, Mr Gusek said. “They will eventually spend the same amount of dollars,” he said. “It can end that they do less work as a result.”
This is partly because investors want oil and gas companies to operate conservatively.
After Mr Trump said in February that he would install 25 percent rates for steel and aluminum, the Chief Financial Officer of Devon Energy, a larger oil and gas producer in Oklahoma City, said the company “had less than 2 percent impact on our general capital program for the year”.
“We feel pretty good that it will have a small impact on us at the moment,” Jeff Ritenour, the Chief Financial Officer, told analysts in a recent conference call. Mr Ritenour also said that Mr. Trump's trade policy was a moving target.
On Thursday, Mr Trump said that goods imported from China would be an extra rate of 10 percent, on top of the 10 percent duty that came into effect at the beginning of February.
There are some signs that the activity of the oil match can pick up.
In January, Mark Waters's Oil Field Supply Company in West -Texas had its best month in his eight years. The turnover approached $ 1.3 million, an increase of more than 40 percent compared to January 2024. Mr. Waters, who said he was now planning to expand his staff, wrote that increase in the things of new companies in the area.
And yet the Lord Waters, who described himself as “a big Trump supporter,” expressed some fear.
“We have thrive under Democrats,” Mr. Waters said about the oil company. “You think it would be the opposite because Republicans are so pro-energy. But it is never really worked out in my career. “
