Nobody asked about Donald Trump, so Mackie McCrea changed the subject himself.
The co-CEO of pipeline giant Energy Transfer wanted to tell stock analysts how great he thinks the president-elect will be for the United States.
“What this election is saying to the world and to this country is that the majority of Americans still believe in our country,” McCrea said during his company’s earnings call this month. “They still believe that we should have law and order.”
The call also reflects how happy many members of the oil and gas industry are to see President Joe Biden heading for the exit, along with his methane fee, natural gas export pause and climate agenda. McCrea did not mention the litany of federal charges directed at Trump, many of which are expected to be dropped now that he’s heading back to the White House.
The industry has enjoyed record-setting oil and gas production during the Biden years, but industry leaders chafed at pollution restrictions and limited oil and gas lease sales on federal lands. The Democratic president approved an oil drilling project in Alaska called Willow, and cut a deal to ensure completion of the Mountain Valley pipeline in the eastern United States. That wasn’t enough to rescue the relationship.
“This administration has sensationalized and has misinformed and has, through climate change fear-mongering, has really tried to influence Americans,” McCrea said. He also criticized Biden for letting in “tens of millions” of migrants “for political power.”
Trump, on the other hand, in addition to promising mass deportations, asked oil executives to spend $1 billion to help him win and cut regulations.
They didn’t come up with nearly that much money. But the oil and gas industry did send more than $20 million to help elect Trump — including $10 million from the longtime face of Dallas-based Energy Transfer, Executive Chair Kelcy Warren.
Trump is also turning to industry-friendly leaders to help fill out his Cabinet. He picked Chris Wright, CEO of Denver-based Liberty Energy, to be secretary of Energy. And he chose Republican Gov. Doug Burgum from oil-producing North Dakota to be Interior secretary and the head of the new National Energy Council.
Still, industry executives may have to contend with massive tariffs Trump is promising that could drive up the cost of steel for drilling rigs and pipelines. The former president has called for a wave of new oil drilling to drive down prices, but that could be bad for the industry’s bottom line.
In a statement, a spokesperson for Trump’s transition team said the incoming president intends to deliver on promises he made to voters.
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail,” said Karoline Leavitt, who has been named White House press secretary for Trump’s new administration. “He will deliver.”
The White House and Vice President Kamala Harris’ campaign did not respond to a request for comment.
Here’s how several of the top issues for the oil and gas business might shake out.
CAN: Roll back regulations
Trump is expected to immediately begin an effort to unravel Biden-era regulations on oil and gas development, as well as pass legislation in Congress to speed up permitting for fossil energy projects.
Deregulation was a hallmark of Trump’s first administration, which rewrote or revoked dozens of energy and climate-related rules at agencies like the Interior Department and EPA.
Some of those rules returned under Biden, along with new ones. The Biden administration raised federal royalty rates from 12.5 percent to 16.66 percent, increased statewide bonding for oil and gas leases twentyfold, instituted more expensive limits on methane emissions, and last week finalized a first-ever fee on excess methane emissions.
Starting next year, oil and gas operators will pay $900 per metric ton of methane over statutory limits detailed in the 2022 Inflation Reduction Act — Biden’s signature climate spending law.
Republicans and the incoming Trump administration could try to revise the methane rules or scrap them.
Congress may be able to unravel the methane fee because it was finalized close to a change in administrations. But a methane charge is still required without a change to the Inflation Reduction Act. Many observers expect the Trump administration to rewrite the regulation and potentially make it easier for companies to be granted exemptions to the charge.
Kathleen Sgamma, president of the Western Energy Alliance in Colorado, said the Trump administration will target methane rules. Some oil companies say EPA’s rule could overcharge industry for methane releases.
“What we’re going to be focused on is overturning some of the overregulation that is clearly unlawful,” said Sgamma, who worked with the first Trump administration on regulatory reforms for federal drilling.
A methane rule finalized by the Bureau of Land Management, which oversees drilling on public lands, may also be in the crosshairs, she said.
“Waste should be regulated. I’ve got no issue with that. But BLM doesn’t have to go above and beyond, because EPA is [already] regulating,” Sgamma said.
Industry officials are also urging the Trump administration to roll back Biden-era bonding requirements — which affect the money that drillers have to secure to cover cleanup costs. An offshore drilling bonding rule finalized this year could bring in nearly $7 billion in new bonding from industry, but some companies say it will lead to bankruptcies.
Energy Transfer’s McCrea said energy companies are open to regulations, but are eager for Trump to reverse punitive measures.
“We’re not arguing that we don’t need to be regulated. But what we’re asking for is reasonable, not onerous regulation,” McCrea told analysts.
His company, Energy Transfer, did not respond to a request for comment Monday afternoon.
Environmental groups are worried about deregulation, having lobbied for years to update oil rules to protect public lands.
An organizer with a conservation group based in the Mountain West said there’s concern that protected habitats for wildlife will be opened to drilling. The person was granted anonymity because of the sensitivity of the issue amid the political transition.
Still, some of Biden’s signature regulatory reforms, including royalty rate increases, may be safe from the chopping block, because they were ordered by Congress in the Inflation Reduction Act, said Mark Squillace, a former Interior Department lawyer during the Clinton administration, now a natural resources law professor at the University of Colorado, Boulder.
Sgamma said repealing the rules passed in the Inflation Reduction Act probably won’t be a high priority. Instead, the likely Republican-controlled Congress will be focused on permitting reforms that advance fossil fuel projects and updating the National Environmental Policy Act — longtime asks of both traditional and renewable energy industries.
“Permitting reform has for years remained elusive due to Congressional gridlock. Now, with a potential trifecta GOP majority, permitting reform will likely be top of the agenda for Senate and House energy committees,” the Independent Petroleum Association of America wrote in a blog post this month.
CAN’T: Make companies drill more
The day after the election, Trump spokesperson Jason Miller told the “Today” show that the first thing the new administration will do is “get back to drilling.”
But don’t expect a traffic jam of oil rigs on Inauguration Day. Despite what Trump has said, U.S. oil and gas production is setting records.
And more production right now likely would hurt the oil companies’ bottom line.
Trump has promised to “drill, baby, drill” to bring gasoline prices below $2 a gallon, specifically mentioning a past price of $1.87. To get there, the benchmark price of U.S. oil would have to fall by more than two-thirds from its current perch at about $70 a barrel. Oil executives may like the slogan, but they don’t want to produce so much they create a glut and lower prices.
“They’re not going to produce just so we can have $2 gas,” said Frank Maisano, a senior principal at Bracewell who represents clients in the oil and gas industry as well as in renewables.
And, outside of a national emergency, the federal government cannot force companies to drill more.
Market factors right now, such as reduced Asian consumption and OPEC countries considering a production increase, mean oil companies aren’t going to want to raise production, said Ed Hirs, a University of Houston energy economist.
“The capital is not there. The market is softening,” Hirs said. “It’s not going to happen.”
Gasoline prices are nowhere near $1.87, but they’re pretty low in relative terms.
On Monday, the fuel-price-tracking service GasBuddy put the national average gasoline price at $3.02 per gallon, the lowest level since May 2021. The average has fallen for five straight weeks. The GasBuddy average is down more than 15 cents from a month ago and over 27 cents from a year ago.
That might be why, in their statements congratulating Trump on his victory, most industry trade groups didn’t echo his call for more drilling and production.
The American Petroleum Institute, for example, called for an “all-of-the-above” strategy and “bipartisan solutions that unleash American energy as a driver of economic prosperity, environmental progress and stability around the world.”
Despite Trump’s political rhetoric — Maisano called it “sloganeering” — what angered oil executives under Biden were policies and planning decisions that could restrict oil and gas development years down the road.
Trump is likely to immediately take steps to increase the amount of public land and water offered for oil and gas development, though it remains up to oil and gas companies to bid in federal oil lease sales that can take years to develop.
Biden froze new oil and gas leasing in 2021. A federal judge forced Biden to resume sales, but auctions have been small and less frequent than historic norms.
Mike Sommers, CEO of API, noted in a call with reporters last week that 2024 is the first year since 1966 that the federal government hasn’t held an offshore lease sale in the Gulf of Mexico.
The unleashing that API officials seek would mean fewer regulations, more access to land for leasing and stripping away Biden’s environmental regulations. For oil and gas companies, that may or may not mean more drilling, but it could translate into higher profits.
“I don’t think the level of production in the U.S. is being constrained by external restrictions,” Exxon Mobil CEO Darren Woods told CNBC in an interview this month. He said he was “not sure how ‘drill, baby, drill’ translates into policy.”
What could bring down the price of gasoline is Trump’s favorite word — tariffs. But, according to a post-election analysis from the consulting firm Wood Mackenzie, any gasoline price drop could be part of a troubling trend. Tariffs could slow economic activity and bring oil prices down by $5 to $7 a barrel.
On the other hand, the firm said continued escalation in hostilities between Israel and Iran could drive prices “sharply higher.”
CAN: Act faster on LNG permits
A second Trump administration is expected to make good on a campaign pledge to quickly issue permits for companies planning to ship liquefied natural gas overseas.
In late January, the Biden administration angered the U.S. oil and gas sector by announcing a “pause” on LNG export approvals to the majority of the world — citing a need to take a deeper dive into the climate and economic consequences of those shipments. LNG is natural gas that’s cooled to a liquid at minus 260 degrees Fahrenheit.
Although a federal judge halted Biden’s pause in July, oil and gas trade groups have continued to argue the pause should be rescinded.
In a statement, Charlie Riedl, the executive director of the Center for Liquefied Natural Gas, congratulated Trump on his win and said his new administration should start unlocking LNG’s benefits by “lifting the Department of Energy’s ‘pause’ on LNG export permits.”
Analysts noted that while a second Trump administration will end DOE’s pause, there will be some lag as new staffers work through pending non-free-trade-agreement export applications.
“It will take time for the Department of Energy (DOE) to re-staff and satisfy requisite legal and environmental reviews, despite Republicans’ likely control of both legislative branches,” Simon Flowers, Wood Mackenzie’s chair and chief analyst, said in a post after the election. “New permits might only be issued after the spring, enabling projects to [final investment decision] in the second half of the year.”
In an analysis issued after the election, research firm ClearView Energy Partners said “day-one” actions under Trump could include “an announced end” to Biden’s pause on non-FTA export approvals.
ClearView said Biden’s DOE could speed up its delivery of the economic and environmental review of LNG exports that the agency and its labs have been working on since January — possibly hindering Trump’s plans for quick approvals.
DOE has said it will publish its draft updated analysis before the end of 2024. There will be a 60-day public comment period.
“Americans deserve the most up to date information as we make decisions authorizing US energy resources to go beyond our borders,” said a DOE spokesperson, who did not give a name.
In a statement, Riedl at the Center for LNG said pending non-FTA authorizations could be affected by when DOE’s export study comes out.
“The Biden administration has a very limited amount of time to implement a comment period, review those comments, and release a final study,” Riedl said. “As long as the final study is released before inauguration day, it will be part of the federal record and could potentially have an impact on the legal durability of any approved LNG export project application.”
Fauzeya Rahman, editor and LNG specialist at the commodity research group ICIS, said recent comments on companies’ earnings calls have hinted at the “potential timeline for when permits could resume.” For example, the second phase of Sempra’s Port Arthur LNG project could get its non-FTA permit from the DOE sometime in the first half of 2025, Rahman said via email.
Commonwealth LNG and Venture Global are two other LNG companies still awaiting their non-FTA export approvals from DOE.
“Commonwealth LNG continues to prepare for achieving [final investment decision] in the second quarter of next year,” said Lyle Hanna, a spokesperson for the company, in an email. “This remains our projection, anticipating that the DOE ‘pause’ will be lifted by early 2025 and that we will receive our non-FTA authorization soon thereafter.”
In a separate statement, Venture Global said it looks forward to working with the Trump administration to “cement America’s role as the world’s leading supplier of clean liquefied natural gas.”
CAN’T: End U.S. refineries’ reliance on foreign oil
One of Trump’s campaign promises was to raise tariffs on foreign goods in order to help pay for domestic tax cuts. But he won’t be able to put tariffs on imported oil without causing gasoline prices to spike and causing issues in the U.S. oil refining industry.
While the United States is producing a record amount of crude — churning out an average of 13.4 million barrels a day in August — the country’s refineries are unable to process all of it and turn it into gasoline.
Refineries across the U.S. refine a lot of heavier, more viscous crude with higher sulfur contents — known in the industry as “sour” crude thanks to the sulfur smell. Meanwhile, the U.S. mostly produces lighter crude that has lower sulfur contents, known as “sweet” crude.
Sweet crude is easier and less energy intensive to refine than sour crude, a trait that makes it more valuable and expensive. Sour crude is cheaper, and it was the primary type of oil produced around the world when U.S. refineries were built decades ago.
Patrick De Haan, head of petroleum analysis at GasBuddy, said the system was built like that because most of the United States’ crude supplies for refineries in the past came from Canada. And refineries around the Midwest were designed to take advantage of that foreign resource.
“Only in the last 10 or so years has the US seen suddenly a boom in shale oil, which is ultra-light,” De Haan said. “So refineries could process it, but all these refineries in the Midwest that process Canadian oil were just set up during an era when the only source of oil available was Canadian heavy oil.”
Still, U.S. refineries can process oil produced domestically. American Fuel and Petrochemical Manufacturers, a trade group for refiners, says about 60 percent of crude that runs through U.S. refineries is also produced in the country.
And refineries are working to be able to refine more U.S.-produced sweet crude, De Haan said. Exxon Mobil, for example, spent $2 billion expanding its Beaumont, Texas, refinery so it could process 250,000 barrels a day of lighter crudes. That expansion came online last year.
If tariffs are placed on imported oil, that could raise prices for gasoline consumers, De Haan said, especially in the Midwest. The refining industry has also spoken out against any proposed tariffs on imported oil.
“Across-the-board trade policies that could inflate the cost of imports, reduce accessible supplies of oil feedstocks and products, or provoke retaliatory tariffs have potential to impact consumers and undercut our advantage as the world’s leading maker of liquid fuels,” said Rachel Farbman, a spokesperson for the American Fuel and Petrochemical Manufacturers, in an email.
“Our industries will continue urging officials to veer clear of any policies that could disrupt America’s energy advantage,” Farbman added.
