What happens when an energy emergency is declared, but there’s no energy emergency? Drill, baby drill? Not so fast.
Given the US is the largest producer of oil and natural gas, I’m skeptical domestic producers will flood the market and lower commodity prices. Sure, they’ll love the deregulation, probably boosting stock prices a little, but consumers surely won’t benefit from cheaper prices.
It seems companies would also be reluctant to invest in high dollar oil and gas infrastructure given the relatively short duration of the current administration. This type of investment wouldn’t pay off until well after 2028. That’s risky capex spending only to have to switch gears with a more climate friendly administration.
One thing that would lower prices…less consumption of oil and gas by stimulating alternate sources of energy and pushing more EV production. Seems unlikely, we’re going back in time for no other reason than to stick it to the greenies.
Shifting gears to EVs. Full disclosure, I’m not the CEO of an auto manufacturer. If I were, the joy derived from deregulation would be overshadowed by the uncertainty being shoved up my arse. Should I continue to develop EVs, knowing that sales may not pan out for years? Should I drop EV production, knowing that eventually I’ll be screwed because I can’t compete with other auto manufacturers when EV mandates kick back in?
Because of the schizophrenic energy policies laid out by our current government, our ability to compete in these spaces will be damaged for decades.
I’d link the song referenced in the post title, but could get in trouble…Ruth Wallis, search it up!
One way to establish a plausible basis for an EV delay would be to say they need to wait for the “new tech” batteries to be reasonably available AFTER they have been proven in real-world use. That would mean a delay to 2027 or later would not be unreasonable if the public/investors buy it. Meanwhile, the competition will not be doing much of a delay, especially with the low-price Chinese EVs becoming available outside the US. Remember: Nothing prevents the Chinese mfrs from “informing” the US public about what the public is missing by NOT being allowed to buy their cars. National security is nonsense because TikTok is the example the US govt was wrong. The only reason to deny the lower-priced imports is to make them pay more for everything. Especially gas and ICE-related expenses that will cost each person thousands of $$$ each year.
It isn’t about drilling. It’s about profit. In 2023, the US imported 6.5 Million barrels per day from Mexico and Canada. if the proposed tariffs are implemented, that oil becomes 25% more expensive, overnight. So US producers increase their prices in step, with no increase in costs. Kaching!
Maybe. Depends what Saudi Arabia chooses to do. They can undercut anyone else due to their minimal cost of production. Remember: Oil prices are worldwide, so the Saudis can drive the world price for oil as low as they desire/choose. Of course, that would also get Putin mad, but that is his problem.
Or, TNG can put a big tariff on Saudi oil too. I remember, in the late 70s, there was a proposal to put a big tariff on imported oil, to give price protection to the various “oil shale” and coal liquefaction projects that were trying to get off the ground. This time, the argument would be “national security” to block increases in imports from anyone else, and, having lived through a few “oil crises” myself, they would have a point.
Ah, there is your error. Saudi oil is the “measuring stick”, but that is all. Prices for oil from other sources are priced based on world prices. So oil from any other source would fall relative to the reduction in the world oil price. The price of farm products from the Central US will jump even more because the price those refineries pay for Canadian oil will go even higher. Remember: The official TransCanada analysis of the result of shipping that oil out of the US would add $5B to the costs in the Central US. That pipeline now exists and Canada is exporting that oil as well.
[Canada’s New Oil Pipeline Tilts Flows to Asia, Away From US Gulf]
(Canada’s New Oil Pipeline Tilts Flows to Asia, Away From US Gulf)
The shift shows the government-owned Trans Mountain project is living up to its goal of reducing the Canadian oil industry’s reliance on US-bound pipelines and American refiners, which has resulted in deeper discounts for its crude and left it vulnerable to steep price shocks. Almost two-thirds of Canada’s new west coast shipments headed to China, India, South Korea and Brunei, with the remainder going to US buyers, largely along the Pacific.
OMG, please don’t advertise this. Next thing we know, we’ll be applying 25% tariffs on Canadian oil AND building the Keystone XL pipeline. Because you know, that makes sense…
A lot of it is, but that’s not the point. They’re juvenile policy decisions that will have lasting impacts on our economy and ability to compete in the future.
Remember: TransCanada was to pay to build Keystone XL. They don’t need it any more, so they will not sign or pay for anything in the US. Start an online petition to demand $1/gallon gas by July 4, 2025. Otherwise, he is a FAILURE–AGAIN.
Oh, I know. That was the point. But when the agenda has no other point than to stick in to the greenies, you get dumb-dumbs in the US who will no doubt agree to tariffs AND paying to build a useless pipeline.
Build that pipeline to Florida and let it run 24/7–no way to turn off the flow once it starts. People will get “real concerned, real fast”. How/where they store all that unrefined oil is their problem. DeSantis will be stuck with a real mess. But that is nothing new.
The companies are not worried about US administration but Saudi administration. When US enjoyed shale oil boom and drilling like there is no tomorrow, Saudi’s had enough and dropped the oil prices to $50 and below, a price at which Shale oil companies went bankrupt. Oh yeah I lost ton of money, so it is etched in my memory. Now the oil companies have learned their lessons and so are banks.
With the administration pushing for more drilling, some additional drilling will surely take place. But, it will be measured. Pretty soon, POTUS is going to realize he is already a lame duck and has very little influence in forcing the energy companies to take unprofitable projects.
I am not so sure, the administration is pushing for higher Oil prices. I think, POTUS and the incoming treasury secretary really believe in lower oil prices is the engine for economy. Lower Oil price, low interest rates are what POTUS wants, but if he believes he is going to achieve that by jawboning… I doubt it.
I respectfully disagree. Free markets baby! The oil and gas producers will protect their profits.
It’s irrelevant what they believe or want. He’s limited to a 4 year term and oil and gas contributed to his candidacy. In the end, oil and gas will get what they want, not the other way around.
I remember the talking heads on bubblevision, just before the invasion of Iraq, were really enthusaistic. Words to the effect “the US oil companies will go into Iraq, develop the Iraqi reserves, flood the market with oil, and the price will drop to $10/barrel”…just the opposite happened.
The base consumer doesn’t think, “Gasoline is super cheap! I’m gonna drive an extra 500 miles this week!”
Another point, imported heavy crude is cheaper than sweet light domestic crude. We export the expensive stuff and import the cheap stuff. All in an effort to regulate prices and maintain profits.
Drill baby, drill reflects a special ed kindergartner level understanding of the market.
Bingo. If Saudi Arabia decides to reduce the world price of oil, the US will also get less for its exports as a consequence. IF the US companies even choose to pump more oil (at a loss?). LOL !!!
Trump is a very transactional, and we have seen how the big tech to everyone paid visit mar-a-lago or contributed millions to the inauguration. Oil and Gas will get things like drilling in federal land, etc. But there will be pressure to bring Oil prices down. I am not convinced he will succeed, but he will certainly try.
Y’day in a video speech at Davos, he said If Saudis drop oil price, Ukraine war will come to an end!!! Interesting comment, one he hints that he wants lower Oil price, two if he can ask Saudis, surely he can ask US companies to increase their production. I am equally interested to see if he will ask India/ China not to buy Russian Oil or slab sanctions on them.
Until someone at the world stage strikes back Trump/ US very hard, this rabble rousing will continue.