President Donald Trump came into office swearing to “drill, baby, drill,” and, on day one, signed an executive order aimed at “Unleashing American Energy.” Just over 100 days later, oil companies released their first quarterly earnings reports of Trump’s second term, and let’s just say, it wasn’t a pretty sight. The two biggest oil companies in the United States saw their revenues take a nosedive. Exxon Mobil’s earnings fell by 6 percent compared to last year, landing at $7.7 billion. Chevron didn’t fare much better, with its first-quarter income dropping over a third to $3.5 billion. The chief executive of Exxon Mobil, Darren Woods, lamented the downward pressure on prices and margins during a call with analysts on Friday, emphasizing the importance of focusing on what they can control in this challenging environment.
This dismal performance marks the end of a three-month stretch that saw oil executives envisioning a boom under the new administration. However, since Trump’s inauguration, things have taken a turn for the worse. The price of a barrel of oil has plummeted from nearly $80 to around $60, new tariffs have driven up costs for materials like steel, and economic uncertainty has made planning a nightmare. The number of drilling rigs in the nation’s largest oil field, the Permian Basin, has dropped by about 3 percent over the last month, painting a bleak picture for the industry.
Sanjay Srinivasan, a professor of petroleum and natural gas engineering at Penn State University, expressed concern over the lack of continuity in policy making that affects the oil industry. President Trump declared a national energy emergency shortly after taking office and has been advocating for an expansion of fossil fuel extraction. The Department of Interior announced plans to open more public land to drilling, including in the Arctic, and streamlined the permitting process for projects. However, environmentalists like Jasmine Vazin from the Sierra Club are alarmed by the administration’s fast-tracking of risky projects that could endanger people, water, and the environment.
On one hand, Trump is pushing for increased fossil fuel extraction, but on the other, he’s calling for oil prices to drop to $50 a barrel, a move that could devastate the industry. Executives are already cutting future capital expenditures based on the administration’s conflicting goals, and the recent tariffs on steel have further strained oil companies. The uncertainty surrounding tariff policies and global oil demand has left executives feeling uneasy about the future of the business.
Despite Trump’s promises to boost American oil output and create more jobs, the industry has suffered significant losses under his administration. The president’s unpredictable policies and conflicting statements have only added to the instability in the market. As one executive put it, “I have never felt more uncertainty about our business in my entire 40-plus-year career.” With American oil-and-gas companies losing billions in stock-market value, it’s clear that the industry is facing turbulent times ahead.
It remains to be seen whether the Trump administration can bring stability to the oil industry. Even if they do, there’s no guarantee that American oil production will grow significantly or lead to more job creation. Trump’s nonchalant attitude towards the industry’s struggles, as evidenced by his statement in North Carolina, doesn’t inspire much confidence in his ability to support the sector. As the industry continues to face challenges and uncertainties, one thing is certain: the road ahead will be a bumpy one.
