The US oil industry is facing significant uncertainty due to President Donald Trump’s tariffs, with many drillers reconsidering new projects or delaying existing ones.
Industry executives say that the cost of pipes needed for drilling projects has doubled following Trump’s tariff on steel imports, while the price of oil has fallen by 17% this year. This makes it difficult for companies like J. Nelson Wood’s to break even, with prices for his oil from the Illinois Basin dropping to $49 a barrel.
Andy Lipow, president of Lipow Oil Associates, notes that Trump’s tariff policies are negatively impacting the industry’s goal of “drill, baby, drill.” With lower crude oil and natural gas prices, revenues are being impacted, while costs of drilling materials are going up. He expects gas prices to fall around 15 cents a gallon in the coming weeks.
Many small oil businesses, like Patrick Montalban’s in Montana, are feeling the squeeze. With operating costs increasing by 30% since the pandemic and prices for his oil dropping, Montalban says he won’t be able to absorb a $25 price cut without affecting his business.
Despite Trump’s efforts to support the industry, drillers say that falling oil prices are a major concern. Mike Cantrell, whose family has been in the oil business for over 90 years, notes that the Biden regulatory regime may not have had an impact on small producers, but it’s the price dropping that matters.
The uncertainty is affecting companies like Ken Hunter, who operates more than 700 wells in the California and Utah region. He bought steel-based tubing and casings anticipating tariffs but may delay his project if oil prices keep falling.
The US oil industry faces significant challenges due to Trump’s tariffs, with many drillers reconsidering new projects or delaying existing ones. The uncertainty is affecting companies of all sizes, from small businesses like Montalban’s to larger operators like Wood’s.
Source: https://www.nbcnews.com/politics/trump-administration/trumps-tariff-moves-are-undercutting-drill-baby-drill-oil-push-rcna200402