Paul H. Tice is a senior fellow at the National Center for Energy Analytics and the author of “The Race to Zero: How ESG Investing Will Crater the Global Financial System.”
After being elected in 2024 with strong financial support from U.S. oil and gas companies, President Donald Trump has returned the favor by apparently unfriending the industry during his first year in office. Trump had earned the backing of this pivotal business sector largely based on his campaign promise to “Unleash American Energy.”
Since Inauguration Day, the president has exhorted U.S. producers to “drill, baby, drill,” mainly to help push down oil prices, even though the global crude market remains chronically oversupplied, and the Organization of the Petroleum Exporting Countries and its partners have been ramping up output since last spring.
Trump’s drilling plea has fallen on deaf industry ears. Domestic crude production was already at record levels. Adding more U.S. barrels to the global market would run counter to the capital discipline now embraced by American producers. Still, West Texas Intermediate crude oil prices have declined by roughly $20 per barrel over the past 12 months and are now hovering around $60, below the drilling breakeven point for many operators.
Despite this, the White House has seized on energy as a key component of the American affordability crisis that it inherited as it makes a political pitch to voters before the midterm elections. Trump has prioritized cutting oil and gasoline prices, even though the energy sector contributed much less than food and shelter to U.S. consumer price inflation during the Biden administration. Moreover, electric utility rates, not oil and gas prices, are the more pressing problem for American consumers these days.
The U.S. military intervention in Venezuela has cracked open a new fault line in the administration’s fraught relationship with the industry. What started as an international police action against drug trafficking has morphed into an exercise in rebuilding an oil nation.
Trump is pressuring America’s energy majors to invest $100 billion in Venezuela to help raise its annual production volumes and — wait for it — further drive down oil prices. Compounding matters, Trump expects these publicly traded U.S. companies to throw good money after bad in Venezuela. Thus far, he has ignored the 2007 expropriation claims of American energy players against the socialist country and signed an executive order prohibiting any such recovery from the Venezuelan oil funds seized by the U.S. government.
If Trump really wants to help the oil and gas industry, he should focus on regulatory regime change at home rather than trying to manage global energy commodity price levels and micromanage corporate capital spending plans.
While the administration has taken steps to dismantle much of the climate and other environmental bureaucracy at the federal level, all these moves have been enacted through executive order or agency ruling. In the absence of legislative action or judicial affirmation to support these executive actions, all this will pass when the next Democrat takes over the White House.
Many U.S. oil and gas players have been slow to publicly renounce their low-carbon commitments, emissions reduction targets and sustainability goals because they are likely concerned that the current climate deregulation will prove as ephemeral as during Trump’s first term.
Energy companies did not publicly support Trump during the last presidential election cycle because they wanted government handouts, which the industry does not need to thrive. Rather, it was based on the expectation that he would follow through this time by delivering lasting relief from the anti-fossil-fuel regulations, taxes and lawsuits that have dogged the hydrocarbon sector for the past 20 years.
As the most experienced energy hands in the Cabinet, Energy Secretary Chris Wright, who ran an oil field services company, and Interior Secretary Doug Burgum, the former governor of an oil-producing state, should counsel an energy policy course correction.
First, the administration needs to stop working at cross purposes with the domestic industry by disparaging oil prices. The price bottom has dropped out of the oil market twice since 2014 and could do so again given the state of geopolitical uncertainty. Trump 47 needs no reminding that in 2020, during the last year of Trump 45, more than 100 U.S. energy companies filed for bankruptcy after oil prices went briefly negative.
Second, the White House should focus on doing the heavy legal lifting required to cement Trump’s climate deregulation agenda, including leveraging Republican control of Congress while he still has it and fast-tracking the expected legal challenges to his executive actions to allow for a final Supreme Court decision by 2028 at the latest.
A permanently leveled playing field, equal industry treatment and the freedom to operate are all that American energy is asking of its friend in the White House.
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