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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Decidedly in favor of the fossil fuels industry, U.S. President-elect Donald Trump is likely to ease regulatory burdens for drillers, though further gains may be hard to reach given recent production trends.
Trump takes the oath of office Monday for his second, non-consecutive term in the White House, taking over from former President Joe Biden and his clean-energy agenda.
Biden during his term enacted a pause, later suspended by the courts, on new export terminals for liquefied natural gas (LNG). Methane is the main component of natural gas, though it's a potent greenhouse gas worth examining before green-lighting anything new, Biden argued.
By that time, the U.S. had become the world leader in LNG exports, leap-frogging Australia and Qatar. But among the 100 or so executive orders that Trump was expected to sign on Monday was a measure that would facilitate more export permits for LNG, sources told the Reuters news agency.
Companies had needed special permission to reach LNG supply deals with countries that do not have a free-trade agreement with the U.S. While the order on LNG exports could support the industry, it could also complicate trade with Canada and Mexico.
The U.S. is a top exporter of piped natural gas to Mexico, and the fate of those exports are unclear amid the looming tariff threat. Total exports of LNG, meanwhile, are on pace to reach new highs.
In its Short-Term Energy Outlook report for January, the U.S. Energy Information Administration (EIA) forecast total LNG exports would average 14 billion cubic feet per day (Bcf/d) this year, a 16% increase over last year, and jump to 16 Bcf/d by 2026.
Even before Trump was elected in November, the EIA was forecasting an expansion in the LNG sector.
For upstream, meanwhile, Trump is expected to take a page from former Alaska Governor Sarah Palin and pursue a "drill, baby, drill" strategy for oil and gas. But there too, the U.S. is already the world leader in oil and gas production.
OPEC economists in their January report said much of the gains in global production would come from the Americas. For its part, the EIA, which is the statistical arm of the Department of Energy, finds total U.S. crude oil production is on pace to increase slightly from year-ago levels to average 13.5 million barrels per day (BBL/d).
In its January 2021 report, the month Trump left office after his first term, the EIA said it expected total crude oil production to average 11.1 million BBL/d for the year. Total natural gas production, meanwhile, is expected to average 114.5 Bcf/d in 2025, compared to 88.2 Bcf/d when Trump last left office.
While pro-industry groups welcomed Trump's return, energy companies are largely in private hands and beholden to their shareholders, not the president. On Friday, after posting a 3% increase in year-on-year revenue with $9.28 billion during the fourth quarter, upstream services firm SLB (NYSE:SLB) (Houston) vowed to return some of that to its stakeholders.
"Given our confidence in the business outlook and our ability to continue generating strong cash flows, we are pleased to announce that our Board of Directors has approved a 3.6% increase to our quarterly dividend," SLB Chief Executive Officer Olivier Le Peuch said.
On the broader U.S. economy, aggressive rate policies from the U.S. Federal Reserve during the Biden administration dampened inflationary pressures for consumers and businesses. In the so-called Beige Book, formally the Summary of Commentary on Current Economic Conditions, the Fed said that consumer spending had improved, largely on the back of strong holiday sales, and vehicle sales were up. But something of a squeeze is expected.
"Construction activity decreased overall, with several districts indicating that high costs for materials and financing were weighing on growth," Fed economists wrote on Thursday. "Manufacturing decreased slightly on net, and a number of districts said manufacturers were stockpiling inventories in anticipation of higher tariffs."
Tariffs can cut both ways, though it's largely the importing nation that suffers the most as companies transfer the extra import costs down to the consumer. OPEC economists nevertheless said they expected a modest 2.4% growth in the U.S. economy this year, though that falls to 2.3% by 2026. Core inflation, meanwhile, remains slightly above the Fed's target rate of 2% annually.
"It remains to be seen which imported goods may be affected and to what extent, but it is possible that these tariffs may lead to rising costs for consumers and businesses depending on these imports," OPEC economists wrote in the market report for January.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
Trump takes the oath of office Monday for his second, non-consecutive term in the White House, taking over from former President Joe Biden and his clean-energy agenda.
Biden during his term enacted a pause, later suspended by the courts, on new export terminals for liquefied natural gas (LNG). Methane is the main component of natural gas, though it's a potent greenhouse gas worth examining before green-lighting anything new, Biden argued.
By that time, the U.S. had become the world leader in LNG exports, leap-frogging Australia and Qatar. But among the 100 or so executive orders that Trump was expected to sign on Monday was a measure that would facilitate more export permits for LNG, sources told the Reuters news agency.
Companies had needed special permission to reach LNG supply deals with countries that do not have a free-trade agreement with the U.S. While the order on LNG exports could support the industry, it could also complicate trade with Canada and Mexico.
The U.S. is a top exporter of piped natural gas to Mexico, and the fate of those exports are unclear amid the looming tariff threat. Total exports of LNG, meanwhile, are on pace to reach new highs.
In its Short-Term Energy Outlook report for January, the U.S. Energy Information Administration (EIA) forecast total LNG exports would average 14 billion cubic feet per day (Bcf/d) this year, a 16% increase over last year, and jump to 16 Bcf/d by 2026.
Even before Trump was elected in November, the EIA was forecasting an expansion in the LNG sector.
For upstream, meanwhile, Trump is expected to take a page from former Alaska Governor Sarah Palin and pursue a "drill, baby, drill" strategy for oil and gas. But there too, the U.S. is already the world leader in oil and gas production.
OPEC economists in their January report said much of the gains in global production would come from the Americas. For its part, the EIA, which is the statistical arm of the Department of Energy, finds total U.S. crude oil production is on pace to increase slightly from year-ago levels to average 13.5 million barrels per day (BBL/d).
In its January 2021 report, the month Trump left office after his first term, the EIA said it expected total crude oil production to average 11.1 million BBL/d for the year. Total natural gas production, meanwhile, is expected to average 114.5 Bcf/d in 2025, compared to 88.2 Bcf/d when Trump last left office.
While pro-industry groups welcomed Trump's return, energy companies are largely in private hands and beholden to their shareholders, not the president. On Friday, after posting a 3% increase in year-on-year revenue with $9.28 billion during the fourth quarter, upstream services firm SLB (NYSE:SLB) (Houston) vowed to return some of that to its stakeholders.
"Given our confidence in the business outlook and our ability to continue generating strong cash flows, we are pleased to announce that our Board of Directors has approved a 3.6% increase to our quarterly dividend," SLB Chief Executive Officer Olivier Le Peuch said.
On the broader U.S. economy, aggressive rate policies from the U.S. Federal Reserve during the Biden administration dampened inflationary pressures for consumers and businesses. In the so-called Beige Book, formally the Summary of Commentary on Current Economic Conditions, the Fed said that consumer spending had improved, largely on the back of strong holiday sales, and vehicle sales were up. But something of a squeeze is expected.
"Construction activity decreased overall, with several districts indicating that high costs for materials and financing were weighing on growth," Fed economists wrote on Thursday. "Manufacturing decreased slightly on net, and a number of districts said manufacturers were stockpiling inventories in anticipation of higher tariffs."
Tariffs can cut both ways, though it's largely the importing nation that suffers the most as companies transfer the extra import costs down to the consumer. OPEC economists nevertheless said they expected a modest 2.4% growth in the U.S. economy this year, though that falls to 2.3% by 2026. Core inflation, meanwhile, remains slightly above the Fed's target rate of 2% annually.
"It remains to be seen which imported goods may be affected and to what extent, but it is possible that these tariffs may lead to rising costs for consumers and businesses depending on these imports," OPEC economists wrote in the market report for January.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).
