Oil and gas execs are unhappy with Biden — but not eager for Trump’s return

HOUSTON — Oil and gas executives are chafing under President Joe Biden's attempts to rein in their industry — but sweating at the thought that Donald Trump might replace him.

Industry executives assembled here for CERAWeek, one of the world’s premier annual energy conferences, disparaged Biden administration regulations on their greenhouse gas emissions and its pause on new gas export permits. But though they're confident Trump would reverse those policies, many fear a return to the volatile international relations and idiosyncratic management style he brought to his previous four years in office.

“Trump is going to be Trump,” said Dan Eberhart, chief executive officer of privately owned oilfield services company Canary and a supporter of the ex-president, crediting his first-term policies for making the United State an energy superpower. “I expect he’ll pick up where he left off if he’s reelected.”

“The flip side of that is that he tends to favor a protectionist trade policy and is likely to impose tariffs if he thinks the U.S. is getting a raw deal,” he added. “That’s going to be a positive selling point for some, but there is always the risk that tariffs could turn into a trade war.”

The oil and gas industry still skews heavily toward the GOP, and Trump has drawn far more money from the industry during the primaries than his GOP competitors. But the sense of ambivalence among the executives this year mirrors the sentiment in the broader electorate, where polls show voters are generally dissatisfied with their choices for the presidency.

Trump has been a staunch backer of the oil and gas industry on the campaign trail, pledging in his stump speeches to “drill, baby, drill, right away.” But several of his other proposals could pose problems for the companies’ bottom lines.

The Trump campaign didn’t address specific questions about some industry executives’ concerns about his trade record. Instead, it credited the former president with the boom in U.S. energy production — one that actually started under President George W. Bush, continued under President Barack Obama, and under Biden has helped make the United States the world’s energy powerhouse.

“On day one, President Trump will unleash American Energy to lower inflation for all Americans, pay down debt, strengthen national security, and establish the United States as the manufacturing superpower of the world,” campaign spokesperson Karoline Leavitt said via email.

Trump has taken aim at Biden’s Inflation Reduction Act — a sweeping climate law that aims to move the nation away from fossil fuels but also contains incentives for green technologies that the oil and gas industry sees as potential moneymakers. And he has floated establishing a tariff on all imports to the U.S., which would raise the price on the raw materials the industry needs and could cause a trade-war crossfire for energy companies whose commerce spans the globe.

The heads of the oil giants Exxon Mobil, Chevron, ConocoPhillips and other companies who took the stage at the Houston conference, which ends Friday, did not mention Trump by name or broach the idea of a potentially major change in government policy come next year.

But behind the scenes, interviews with more than a dozen industry executives showed many viewed a possible major realignment of federal energy policy to be part of the new normal — “like a change in the weather,” said one natural gas executive who was granted anonymity to discuss relationships in D.C.

Mike Sommers, chief executive of the American Petroleum Institute, predicted that Biden’s landmark climate law would remain largely intact even if Trump wins in November — though the industry would work with a GOP administration and congressional Republicans to try to remove provisions crimping the oil industry’s bottom line.

“I'm pretty confident that the tax credits that we care about in the IRA are going to continue” even if Trump regains the White House and Republicans control Congress, Sommers said in an interview. “I would expect permitting to speed up significantly for onshore and offshore” oil leasing.

But the uneasiness over Trump’s trade policy would complicate business for an industry that has become the world’s largest oil producer and natural gas exporter. Trump has floated the idea of slapping a 10 percent “universal tariff” on imports into the United States, plus possibly additional tariffs on imports of goods from China — which would raise the likelihood of retaliatory trade measures.

“If they're actually going to impose a 10 percent import fee that's not something the industry is going to be on board with,” Sommers said.

Overall, the oil industry favors Republican control of the government and a light touch on their activities. Executives at the conference repeatedly complained about the Biden administration’s pause on new liquefied natural gas export permits and called the EPA’s new rule cracking down on methane emissions “unworkable.”

Toby Rice, chief executive of EQT, the largest natural gas producer in the United States, did not comment on the possibilities of a Trump administration when asked. But he said in an interview that "it's hard to imagine" an administration more difficult to work with than Biden's.

“We have seen punitive policies and executive orders,” Rice said. “We've seen punitive interpretations by the agencies on how the law should be acted out. It has been incredibly confusing.”

Biden campaign spokesperson Lauren Hitt countered that not only has oil and gas production reached record levels despite the administration's regulatory changes, but jobs in the oil and gas sector have also grown after falling during the Trump years.

“I think the record is pretty clear here,” she said, citing government data for the jobs growth under Biden. She added, "President Biden did that all while enacting the most sweeping climate change legislation in our country's history — proving once again that job growth and fighting climate change go hand in hand."

Along with trade, some industry executives also expressed worries about Trump’s penchant to put staunch supporters in top policy roles rather than people with years of expertise.

One LNG executive said the industry blamed Biden climate “ideologues” for much of what the industry didn’t like about the White House’s energy policy. But those executive branch officials are basically competent in day-to-day dealings, said this person, who was granted anonymity because he was not authorized to speak on the record.

The first Trump administration churned through many of the top GOP energy people after a series of scandals at agencies like the Interior Department and EPA caused internal strife and led to a steady stream of resignations. It also faced blowback from announcing policy decisions that hadn’t gone through the official rule-making process.

Many of their replacements were considered “the B team,” and a new administration would likely have to settle “a C or D Team” staff taking the helm at key agencies, said this person, who requested anonymity because he wasn’t authorized to speak on the record.

“We’d go from steady conditions and a process-orientated administration back to chaos,” the person said.

Those sentiments align with industry experience in the first Trump administration. While the former president has been a strong vocal supporter of the oil industry, his steel tariffs dramatically increased the cost of building new pipelines and other infrastructure, and his trade war with China temporarily took one of the biggest buyers of U.S. natural gas out of the market.

Others doubted Trump could repeal the Inflation Reduction Act completely even if he wanted to. Too many of the incentives found in the bill have flowed to new manufacturing facilities and renewable energy projects in Republican-led states, and oil companies are eager to use tax credits in the law to develop technology to cut their greenhouse gas emissions.

“A lot of Republican states benefit also from the [renewable energy] industry and from the IRA, with jobs, etc.,” Marcel van Poecke, chair of the energy portfolio at private equity Carlyle Group, said in an interview. “So maybe it's not as big a change as we think” if Trump wins the White House in November.

Still, Carlyle, which manages $486 billion in assets, was hedging its bets in the sector, Van Poecke said. The fund was holding on to its investments in the oil and gas business even as it builds its renewable energy portfolio as “a hedge against government regulations” that could change, he said.

Consulting company Capstone DC was advising its corporate clients that a Trump administration would likely leave IRA provisions that favor industry in place. But the “consumer-facing” benefits — such as tax credits for electric vehicles and home energy efficiency improvements — would likely face the ax, Josh Price, head of the firm’s energy team said in an interview.

Even if a Trump White House gutted incentives, the oil and gas industry is set to continue investing in clean energy and emissions reductions, said Mark Brownstein, senior vice president for energy transition at Environmental Defense Fund, a nonprofit advocacy group that works with oil companies to help reduce their methane emissions.

“A number of people have said to me, ‘Listen, if we invest in clean energy technologies, it's not because of the subsidy,’” Brownstein said. “They’re not interested in business models heavily dependent on subsidies.”

Exxon Mobil CEO Darren Woods echoed that sentiment. Exxon, which has made investments in carbon capture and lithium processing for batteries, is pursuing those businesses because company officials think they can make money, not because of subsidies, Woods told the audience. The tax incentives in the IRA were needed to kick start new clean energy technologies, but eventually industry would have to live without government support.

“As a company, I’m not too keen on building businesses on government subsidies,” Woods said.

Georges Tijbosch, chief executive officer of MiQ, a firm that measures greenhouse gas emissions, said a Trump administration could easily quash policies like the Federal Trade Commission’s proposed crackdown on false “green” advertising.

But too strong a push to rip up rules on greenhouse gas emissions could backfire, he said, since a major reversal in policies could undermine the green credentials U.S. companies are advertising.

“There is a clear trend in dealing with climate change,” Tijbosch said. “Cities and corporations are going to do what they were doing anyway” even if Trump tries to slash methane rules.