The Oil Industry Is Over a Half-Empty Barrel
Delight over Trump’s election has passed for executives worried about falling prices.
“Remember: The Barrel Is Always Half Full.” That’s the message on a huge electronic billboard in Midland, Texas, the capital of the US shale oil revolution. The meaning is clear: Throughout booms and busts, American oilmen should always look to a brighter future. Yet, that upbeat spirit is nowhere to be seen today. Overwhelmingly, the industry sees the barrel as half empty.
“There’s a lot less optimism,” Scott Sheffield, a shale pioneer, told me in Houston last week during CERAWeek by S&P Global, the annual gathering of the American energy industry.
The gloom seems counterintuitive. Donald Trump has brought his “drill, baby, drill” slogan back to the White House, and installed an industry insider as secretary of energy: oil executive Chris Wright. The mood at the annual jamboree that attracts about 10,000 executives, bankers and traders, should have been ebullient. It wasn’t.
True, in public, everyone is happy about eased regulations and the prospect of lower taxes, not to mention the subject of climate change becoming taboo for this administration. But in private, executives are far more worried about Trump’s push for lower oil prices and the potential of a trade war-induced recession. If anyone in Houston needed a reminder, as the conference got underway, Trump spoke in Washington, saying he was “very happy” with the drop in prices.