How Trump's tariff moves are undercutting his 'drill, baby, drill' oil push
Oil producers across the country say they are thinking twice about taking on new drilling projects and looking to cut costs after Trump’s trade war rhetoric has driven down the price of oil and his tariffs have driven up the cost of drilling.
Oil industry executive J. Nelson Wood was close to starting a multimillion-dollar drilling project in Illinois. Then came President Donald Trump’s tariffs.
Now, the cost of the pipes he will need for the project has doubled following Trump’s tariff on steel imports, while the price for his oil has fallen around 17% this year amid fears that the levies will slow economic growth — and with it demand for oil. Between the higher costs and lower prices, it doesn’t make financial sense for him to drill for more oil, he said.
“It’s very hard for people to have the confidence to invest when markets are in a state of flux and panic, and that’s where we are now,” Wood said. “There’s a lot of uncertainty, and that uncertainty prevents development of a lot of projects — from people my size all the way up through the majors.”
He’s not alone. Oil producers across the country say they are thinking twice about taking on new drilling projects and looking to cut costs after Trump’s trade war rhetoric has driven down the price of oil and his tariffs have driven up the cost of drilling. Just as importantly, wider concerns about a slowdown triggered by tariffs in the economy are also in play, affecting companies' investment decisions.
“President Trump’s tariff policies are really negatively impacting his goal of 'drill, baby, drill,'” said Andy Lipow, president of Lipow Oil Associates, who has worked in oil refining and trading. “From the producer standpoint, they’re now seeing substantially lower crude oil and natural gas prices, which is impacting their revenues. And on the other hand, their cost of drilling materials are going up.”
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