Uncertainty over Trump administration policy dampening US energy sector spirits

Source:Global Times Published: 2018/3/7 20:58:39

Policy tensions are curbing spirits that should be soaring in the US energy sector. The Organization of the Petroleum Exporting Countries (OPEC) will break bread with US shale producers at an industry confab in Houston, Texas, a sign of American wildcatters' influence on the global market. But infrastructure bottlenecks and President Donald Trump's new tariffs threaten to prevent drillers from taking full advantage of their clout.

A year has gone by since global energy leaders last convened in the Lone Star State, and a few things have become clearer. OPEC's production cuts are chipping away at inventories and sending oil prices higher. That has helped US shale drillers at least as much as the cartel, as they grow both market share and profitability. The first supertanker shipped out of Louisiana at the end of February. The International Energy Agency expects the US to become the world's largest oil producer by 2019.

On Monday night OPEC leaders and shale producers discussed over dinner how these factors will affect global prices. Yet American industry executives note problems bubbling on their home turf. Plains All American Pipeline Chief Executive Greg Armstrong said certain steel imports should be exempted from tariffs proposed by Trump last week if the products aren't made domestically, which he said was the case for some steel pipe used by his company. He cautioned, too, that renegotiating the North American Free Trade Agreement could have negative consequences for companies that ship natural gas to and from Mexico. Senator Daniel Sullivan of Alaska touted plans to open up federal lands in his state for drilling, but noted that it still takes up to nine years to receive government approval to build a pipeline.

There are larger forces at play as well. Total CEO Patrick Pouyanné mentioned his ownership of an electric car - noting its irony for an oil executive - when he explained how the French company was shifting more toward natural gas than crude oil production for the long term because of its growing use in generating electricity. American drillers focused on their own drive to become the world's most influential energy power might not want to lose sight of the bigger picture.

The author is Lauren Silva Laughlin, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews. bizopinion@globaltimes.com.cn

Posted in: INSIDER'S EYE

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