Big Oil is losing faith in President Donald Trump’s pledges to build the U.S. into a self-reliant energy superpower.
Top executives from Exxon Mobil Corp., Chevron Corp. and Total SA all took shots at Trump’s trade plans at the World Gas Conference in Washington, expressing concern that U.S. tariffs are a risk to oil and gas demand, and that restrictions on importing steel could impede one of the country’s fastest-growing major industries. An executive from BP Plc targeted Trump’s plan to “bail out” unprofitable coal and nuclear power plants.
The common thread: Restricting trade hurts investor confidence, risking major energy projects from shale pipelines to gas export terminals. It’s a reversal from six months ago when Big Oil was singing Trump’s praises for slashing corporate taxes.
“The risk of trade skirmishes or trade wars starts to weigh on people’s perceptions of economic growth in the future,” Chevron CEO Mike Wirth said in a panel discussion with Exxon chief Darren Woods. “From a demand standpoint I think that’s a risk.”
Last year’s tax reform seems like a long time ago. Exxon praised the tax cut and pledged to invest $50 billion in projects along the Gulf Coast, although many of them were already in the works.
“Early on with tax reform, the deregulation you’ve seen in the U.S., those have enhanced the projects we were looking to do for our company,” Woods said Tuesday. They “are steel intensive projects. When tariffs come on and with threats of a trade war, you risk making those projects less competitive and less attractive.”
Trump has made energy a centerpiece of his plan to boost economic growth, and until now executives have been largely supportive of his policies, such as a plan to open up more than 90 percent of the U.S. coastline to oil exploration.
The ability of companies to extract oil and gas from shale has transformed global energy markets, with the U.S. now rivaling Russia and Saudi Arabia as one of the biggest producers of crude. Trump’s administration has been keen to push this trend. The U.S. will become “the strongest energy superpower this world has ever known,” Interior Secretary Ryan Zinke said in January.
Steel is another flashpoint. Heavily used by the oil industry, it has been subjected to levies and counter-levies contributing to mounting concerns of a full-blown trade war between China and the U.S., the world’s two largest economies.
“We certainly try to buy steel in the U.S.,” Wirth said. But “not everything we need here is made here. Certain alloys and sizes of pipe are not made by U.S. steel manufacturers. We have to procure those elsewhere. It runs the risk of being a drag rather than a huge negative.”
Trump has also been critical of the North American Free Trade Agreement, which he says benefits Canada and Mexico to the cost of U.S. companies and workers. Woods made a point of defending the agreement.
Published: December 9, 2023