The Dallas Federal Reserve’s quarterly survey of more than 130 oil and gas producers based in Texas, Louisiana and New Mexico shows that the outlook for the industry is pessimistic. Of the 38 companies that answered this question, nearly half of the companies saw fewer companies this year than previously expected.
Survey participants can also submit comments. “It’s hard to imagine that policy and DC rhetoric might be worse for U.S. E&P companies,” said an executive at an exploration and production company (E&P). Another executive said, “The chaos of the liberation day and tariff antics hurt the domestic energy industry. “Diamond, baby, drilling doesn’t happen with this level of fluctuation.”
About one-third of survey respondents will expect less of the well to increase tariffs on steel imports. Three-quarters of tariffs raise the cost of drilling and completing new wells.
“They are getting more drilling sites and are getting some lower royalties, but they are getting tariffs they don’t want,” Rapier said. “The most important thing is that their profits will suffer.”
Earlier this month, Exxonmobil estimated that its profits in the April-June quarter will be about $1.5 billion lower than the previous three months due to weak oil and gas prices. In Europe, BP, Shell and Totalenergies send similar warnings to investors to understand their respective profits.
These warnings even if Trump has installed friendly faces to regulate the oil and gas sector, including the Department of Energy, the Environmental Protection Agency and the Department of the Interior, which manages federal lands and is offering more auctions for oil and gas leases on those lands.
“There are opportunities to invest in investments. But there are a lot of caution to make sure to make sure to make regulatory reforms are going to be done,” said Kevin Book, research director at Clearview Energy Partners.
A recently enacted large bill bill contains provisions that four onshore and two offshore rental sales are required annually, reducing the minimum royalty from 16.67% to 12.5% and bringing back speculative leases when land that does not invite enough bidding for rent is stopped for less money for less money.
“Pro-energy policies play a crucial role in strengthening domestic production,” said a spokesperson for the U.S. Petroleum Institute, the highest U.S. oil and gas industry. “New tax legislation unlocks opportunities for safe, responsible development in key resource basins to provide affordable, reliable fuels that Americans rely on.”
Since about half of the federal royalties end up with states and territories where drilling occurs, “the budgets of these oil and gas communities will be hit hard,” said the progressive U.S. Rowland-Shea. Meanwhile, drilling on public land can pollute the air, increase noise levels, cause spills or leaks, and limit movement of people and wildlife, she said.
