Putting aside politics and many of the common narratives, by almost any measure the eight years of the Obama administration were a great time for the oil and gas industries. In 2008, the year Obama was elected, but hadn’t yet taken of office, domestic production of natural gas was about 55 Bcf/day and domestic crude oil production was about 5.0mm bpd. In 2016, obviously Obama’s last year in office, domestic gas production was up to 72 Bcf/ day, that is up 30% over the course of his administration, while oil production was 8.9mm bpd, up almost 80%.
I think the Trump administration will be good for oil and gas as long as the regulatory environment does not get worse. If the administration can make some moves to intelligently lessen the regulatory burdens, we think that would just be gravy for the industry.
This is a good question begs to ask. Actually it depends on what's the narrative of the phrase 'good for oil and gas companies'. If the crude price is high it is good for the owners/leaseholders of the physical wells from where crude oil comes from (I.E. middle eastern and north african countries, Russia etc.). In the event crude oil price is down it is good for the end users (I.E. western world, west asia south america etc.). Either way it goes, I believe, the processors, refiners, tradesman, financiers will remain with similar amount of activities as the consumption of the worlds population will stay steady as the mode of personalized transportation (I.E. cars, buses, trucks etc.) will largely remain depending upon petrochemicals.
Federal Reserve Interest rate: By looking at federal reserve's interest hike trends in recent months it is fairly assumable that prime will keep going up. Mr Trump did not make it a secret during his campaign, and later in past two years in the office, that he will take steps for the USA to pay off some of the debt. If this interest hikes keeps happening it will mean a stronger dollar.
Dollar vs Gold: A stronger dollar will/should make the gold price weaker.
Gold vs Crude Oil: Crude Oil price will follow the gold price curve by only out performing the curve either way up or down.
Russian Foreign policy: Russians are highly intelligent nation who were never defeated at a war. They stays on top of the technology, military and non-military, at any given time. Mr Trump, contrary to conventional assumptions, has increased sanctions on Russian businesses and literary ALL russian oil companies are in the sanction list as of today. Regardless how they try to restructure their oil industries and banking systems it will remain extremely difficult for them to do enough trades which will sustain the largest oil industry in the world. Now, for what so ever reason, if russians decide to make good with the USA in terms of their foreign policy the sanctions may be lifted and IF that situation arises oil will see a drastic low pricing. So, yes it is a big factor how they behave.
War vs Peace in Middle East: WIll Mr Trump's administration peruse a foreign policy which will promote destabilization in Middle East and North Africa? So far there is no such indication. He actually stopped answering to military provocations and trying his best to answer middle Eastern issue with diplomacy and sanctions.
Renewable energy installation in the USA market: Contrary to conventional belief Mr Trump has increased all types of govt subsidies and promotional incentives for the renewable energy industry in the USA. The Solar installation companies are more profitable than ever and wind turbine manufacturers are over booked for next 4 years with advanced supply orders. https://www.seia.org/solar-industry-research-data A new house being installed with solar panels in the USA in every 100 seconds as solar prices are coming down at a very fast pace. Mr Trump also imposed tariff in imported solar panels this year. So domestic solar industry is booming here in the USA. This will be a very big factor in cutting down petrochemical uses of the end-users. To mention China installs more solar than the USA.
Investing in solar and wind power is more profitable, less risky and easier here in the US market. Those sectors have matured as Wall St is fully integrated within the eco-system. So money keeps flowing.
USA domestic production: USA domestic production is open. But who is exploring in new grounds? There are not a lot of movements in the domestic market. Production is up in existing facilities but new facilities are not being built up as the existing facilities are having a hard time to keep themselves profitable. Even highly sophisticated Canadian sand oils are stopping production as they can not make a profit at this price.
So it will remain difficult to determine, as it has been in recent years, how good or bad will the US Govt be for the Oil and Gas industry to sustain and make a profit. Specially with President Trump as he's the man as unpredictable as a man can be.
As a tradesman I believe there will be same amount of movement in the market for me. The producer will produce and end user will buy. I'll make a small profit in between as long as the trade is properly hedged using the correct hedging mechanisms. Its a challenging time. Challenge is fun. Challenge is rewarding. Challenge creates wealth. Challenge brings prosperity.
American Trade Partnership LLC