Chevron and ExxonMobil, the country’s two largest oil companies, both announced first quarter results on Friday. “In this environment, it is more important than ever to focus on what we can control,” said the latter’s CEO Darren Woods. Indeed.
They are both still doing fine, of course — ExxonMobil reported first quarter earnings of $7.7 billion, while Chevron pulled in $3.5 billion. It’s just that they’re definitely doing a lot worse than they might have hoped for after helping shepherd Trump’s Oil Administration into the White House. ExxonMobil’s quarter was about six percent worse than the same period a year ago, while Chevron’s was more than 36 percent worse. It is not quite going to plan.
It was always a bit silly to think that slogans would somehow “unleash” an oil industry that is already the biggest in the history of the world, but Trump’s love of Big Oil is now running up against his propensity to tank everything he touches. Crude oil prices are down around $20 per barrel since the week he took office; they currently are below $60 per barrel, a threshold below which new drilling becomes unprofitable in many places. Drilling of new wells in the Permian Basin, the massive oil field in West Texas and New Mexico, has already dropped by several percent over the last month.
Aside from the oil prices themselves, Trump’s absurdist trade war is, of course, also having an effect. Companies have to pay more for various requirements like steel, again changing the economics of any new well they might want to drill. If oil prices continue to drop, it could result in an almost 10 percent reduction in oil output over the course of a year. In short, if there really were an energy “emergency” that the administration is basing its various oil-friendly policies on, they would be doing more or less the exact opposite. After all, the historic record output of both oil and gas came under President Biden.
Chevron’s CEO Mike Wirth touted his company’s continued strength “despite changing market conditions,” which surely gets a spot in this week’s Euphemism Awards. Though again, he’s not wrong — these remain some of the biggest and richest companies on the planet, and they will continue to be so regardless of how badly their chosen president upends the global economy. But with profits dropping and the financial incentive to follow the “drill baby drill” ethos falling off a cliff, one has to wonder if, in the C-suites of these and other oil companies, at least a little bit of buyer’s remorse might be settling in.
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