Donald Trump wants oil companies to “drill, baby, drill” on the first day of his presidency, but his fossil-fuel benefactors have a different agenda.
Many of the tycoons who backed the Republican’s victorious campaign say what they need help with is shoring up demand for their products—not pumping more fossil fuels, which they have little incentive to do.
They are pushing for policies that would lock in fossil-fuel use, such as easier permitting for pipelines and terminals to shuttle fossil fuels to new markets. They also favor eliminating Biden administration policies meant to put more electric vehicles on the road.
Under President Biden, shale companies produced record amounts of oil and natural gas as crude prices rebounded from the pandemic’s depths and then soared after Russia’s invasion of Ukraine. But the industry is also confronting the early stages of a long-term shift away from fossil fuels, as well as concerns that gasoline consumption has peaked in the U.S.
Trump handed shale donors their first big return on investment by nominating Liberty Energy Chief Executive Chris Wright, a fracking booster and fossil-fuels champion, to lead the president-elect’s Energy Department.
When Dan Eberhart, the CEO of oil-field services firm Canary, met with Trump during a fundraiser at his Mar-a-Lago club in Florida this summer, Eberhart had a unique request. He asked Trump to push back on the International Energy Agency, the influential, Paris-based energy forecaster. The agency has predicted global oil demand will peak by the end of the decade, earning scorn from GOP lawmakers who dubbed the group an “energy transition cheerleader.”
“You need to stop acting like fossil fuels are the devil,” Eberhart said in an interview, referring to the IEA’s stance.
A spokesperson for the IEA said it remains “focused on its key missions of energy security and energy transitions, based on the mandates from our member governments.”
Many of Trump’s oil and natural-gas supporters favor easing regulations that govern drilling. The changes would include scrapping rules targeting methane emissions, getting new permits to frack on federal land and eliminating climate disclosure rules.
But some donors grimace when they hear Trump promise that under his watch, crude-oil producers would open the floodgates. He has also promised to cut Americans’ energy costs by 50% or more.
Oil backers’ skepticism stems from the fact that Wall Street has successfully pressured chronically indebted frackers to stop burning through cash, and return it to shareholders via buybacks and dividends instead of reinvesting it to frack more wells.
“Our stocks will be absolutely crushed if we start growing our production the way Trump is talking about it,” said Bryan Sheffield, a Texas oilman who contributed more than $1 million to Trump’s latest campaign.
Another limiting factor for shale companies is geology. Drillers are running out of premium wells, and many don’t have the runway to pump more oil than they are already.
One area where Trump’s fossil-fuel supporters see clear upside from his new term is exports of natural gas.
Demand for these molecules has experienced an uptick in domestic markets in recent years, but shale companies are producing more than enough to satisfy American consumers. They have been shipping gargantuan amounts of liquefied natural gas, or LNG, to Europe and Asia, making the U.S. the largest natural-gas exporter in the world.
Biden disrupted the companies’ plans to build more terminals when he declared a moratorium on new LNG exports. One of the industry’s top priorities is for Trump to lift the pause on day one of his presidency.
Matthew Ramsey, a director at pipeline company Energy Transfer, said he expects that with Trump in office, energy companies won’t only churn out more natural gas but sell more of it.
“I think ‘drill, baby, drill’ means we open up a lot more markets that have otherwise been closed to us,” he said.
Texas billionaire Kelcy Warren, Energy Transfer’s co-founder and executive chairman, was among Trump’s most prolific donors this election cycle.
Another top supporter was oil billionaire Harold Hamm, who founded Oklahoma shale company Continental Resources. Hamm, who marshaled support for Trump’s campaign among oil-industry executives, is helping to oversee Trump’s energy-transition team. He publicly encouraged Trump to pick Wright, who serves as a director at his lobby, as energy secretary.
Hamm and Wright have criticized people they describe as climate-change alarmists. They expect hydrocarbons to play a significant role in modern societies for the foreseeable future.
“Wildcatting is far from over,” Wright told The Wall Street Journal before the election. The CEO co-hosted a fundraiser for Trump at his Montana home this summer.
Wright didn’t respond to a request for comment.
Trump has vowed to place tariffs on trade partners, a move that some people in the energy industry fear could affect the price of steel, an essential well-building component. Oil companies also have expressed concerns that those tariffs would include imports of foreign oil and other commodities they use to make fuel.
In several conversations since this spring, lobbyists for fuel makers including Exxon Mobil and Valero Energy have told Trump policy advisers that tariffs on crude imports would make them less competitive globally and raise fuel prices. Trump advisers have signaled they want to avoid a price increase, according to people familiar with the matter.
A crucial task for the Trump administration will be balancing its ambition to boost exports of U.S. oil and gas with potential trade complications if Trump imposes tariffs on a range of products.
“In a world where we have undifferentiated tariffs that cause market retaliation for exported energy commodities, it could become very hard to exert energy dominance,” said Scott Segal, a partner at lobbying and law firm Bracewell.
Trump’s incoming administration is also expected to pursue extensive changes at the Environmental Protection Agency, to the delight of many of his oil boosters. His advisers believe that while it might be too difficult to jettison a raft of environmental rules, the administration can make enforcing them more difficult, according to people familiar with the matter.
Methane regulations administered by the EPA are emerging as a divisive topic within the industry. The donors of smaller companies have urged Trump to slash methane regulations they view as too costly. Large companies that sell natural gas into markets such as Europe worry that killing such standards would make their product less appealing to green-minded importers.
