Basking in the Trump vibes, oil industry gathers in Houston

09:00 |

Get full access to Reuters.com for just $1/week. Subscribe now.

Power Up

By Ron Bousso, Energy Columnist

Hello Power Up readers!

I'm writing from Houston, where the energy sector's largest U.S. gathering is still taking place. The annual CERAWeek conference brought together oil and gas royalty and has produced numerous headlines, which, unsurprisingly, focused more often than not on President Donald Trump and his pro-fossil fuel agenda.

Trump's return to the White House caused 'animal spirits' to soar in the oil and gas sector, and these vibes were palpable in the conference halls.

"We can all feel the winds of history in our industry's sails again," Amin Nasser, the CEO of Saudi Arabia's national oil company Aramco, who even evoked the voice of Elvis at the CERAWeek conference.

The upbeat mood music at the conference was set from the start by U.S. Energy Secretary Chris Wright who vowed to bring back common sense by prioritising cheap energy – shorthand for fossil fuels – over supposedly inflationary climate-driven policies, dismissing the need to limit greenhouse gas emissions.

Executives from both fossil fuel and renewable companies are now touting the need to shift from "energy transition" to "energy additions". The current – arguably more realistic – idea is that continued population growth and the need to lift standards of living means there will be rising demand for all sources of energy. To that effect, liquefied natural gas was the star of the conference.

But the industry appears to be ignoring a second central Trump objective: cheap energy. Read more on this in my column below.

Top energy headlines

Energy Collision

While Trump was not in attendance at the conference, his presence could be felt everywhere. Executives peppered their public appearances with catchphrases like "make energy great again" and put forward promises to make multi-billion dollar investments in the United States.

Telling the conference "we love you!", U.S. Interior Secretary Doug Burgum vowed to open up American public land to oil and gas drillers, underscoring Trump's "drill, baby, drill" ethos. The United States already became the world's top oil and gas producer under Biden. The U.S. Energy Information Administration expects crude oil production to rise to a new record average of 13.61 million barrels per day (bpd) in 2025 and climb further to 13.76 million bpd in 2026.

But there's an obvious problem here. Trump wants increased production because he wants lower energy prices – and that stands in direct opposition to expanding investments in oil and gas.

The CEO of U.S. producer OXY Energy Services warned that oil prices below $60 a barrel would likely force small drillers to reduce activity. Benchmark U.S. oil prices are currently around $68 a barrel.

The U.S. president wasn't the only force shifting the narrative in Houston, as energy transition acolytes got a reality check well before Trump's election.

The surge in energy prices in the wake of Russia's invasion of Ukraine in 2022 and post-pandemic inflation led companies and governments to roll back climate targets and investments in renewables and shift their focus to cheap, reliable sources of energy.

The ongoing surge in U.S. LNG production also underpins Trump's energy dominance agenda by supporting investment in domestic industry and giving other nations an opportunity to boost their purchases of U.S. fuel, thereby reducing any trade deficits with the United States, another major bugbear for Trump.

But, again, abundant energy means growing competition and lower prices – good for the Trump agenda, but not necessarily for U.S producers.

Other deep-running trends discussed at the conference further complicate the energy matrix, including China's peaking oil demand and U.S. production nearing a plateau.

Enthusiasm over the future of the sector has also been tempered by increasingly harsh realities on the ground. Turmoil in global markets fuelled by Trump's tariff zigzagging has weighed on oil prices and sowed tremendous uncertainty, two factors that impinge on new investments in the sector.

"Swaying from one experience to another is not the right policy approach. We need consistent and durable policy," Chevron CEO Mike Wirth said.

So the energy industry may have basked in Trump's sun over the past week, but executives should grow increasingly concerned about the contradictions in many of the administration's key policies.

Essential reading

Plenty of things happened in the energy world this week outside of Houston.

Oil prices declined as Trump's widening trade wars with the United States' biggest partners raised concerns over global economic activity. Adding further pressure, the International Energy Agency said in a monthly oil market report that global oil supply could exceed demand by around 600,000 barrels per day this year, after a downward revision to its 2025 demand growth forecast.

Reuters columnist Clyde Russell offers some wise advice for dealing with the rising noise in commodity markets sparked by Trump's erratic policies: Focus on the fundamentals.

The Trump administration announced a wave of regulatory rollbacks, including a repeal of Biden-era emissions limits on power plants and automobiles, as well as reduced protections for waterways.

A rare collision between an oil tanker and a container ship off the English coast this week raised concerns of an environmental disaster, but British Prime Minister Keir Starmer said the incident was "reasonably contained."

And finally, I highly recommend reading this brilliant account on the rapid decline of Russia's gas giant Gazprom since Russia invaded Ukraine more than 3 years ago.