Houston Chronicle Sunday

As Trump tweets on oil, the industry just shrugs

- JAMES OSBORNE james.osborne@chron.com twitter.com/osborneja

WASHINGTON — An email popped up in my inbox. Donald Trump was tweeting again, demanding that OPEC increase its production so Americans wouldn’t have to pay so much for gasoline.

It seemed like an invitation to let people in the Texas oil patch rant, just as they had when Trump imposed tariffs on the steel they use to build pipelines or when he threatened to tear up the North American Free Trade Agreement. After all, in asking the oil cartel to cut production, Trump was effectivel­y trying to reduce oil prices, and that wasn’t going to do anyone in Midland or Abilene or Houston any good.

Except when I started asking around the oil sector, Trump’s actions drew little more than a collective shrug.

Cactus Schroeder, owner of the Abilene oil company Chisholm Exploratio­n, summed up the sentiment of most in the oil fields when he said he understood the inclinatio­n to keep gasoline prices down and money in people’s pockets.

Schroeder said he thinks Trump “wants the full effect of this tax law to be felt. If I was in his position, I would probably do the same thing.”

Trump might be unique in the style of his communique­s — his tweet Wednesday read: “Oil prices are too high, OPEC is at it again. Not good!” But he is not the first American president to meddle in OPEC’s affairs.

During the 1980s oil crash, former President George H.W. Bush, who was then serving as vice president, flew to Saudi Arabia to warn the kingdom that unless it cut production, Congress was likely to put a tariff on foreign oil to prop up American oil companies, according to economist Dan Yergin’s book “The Prize: The Epic Quest for Oil, Money and Power.”

OPEC listened that time, but there is no indication yet that it is planning to do the same now. And even if it did, the cartel’s ability to affect crude prices is not the same as it was in the 1980s, when U.S. oil production was in decline and OPEC controlled a much larger share of the world’s oil supply.

John Olson, a private energy investor in Houston, said it would be a stretch that Trump “can do much to bring oil prices down in an internatio­nal market that’s very free and competitiv­e. I’m not sure what he can do but talk a good game. He has very little leverage.”

And for those drilling in West Texas, the consequenc­es of OPEC actions are likely to be modest. They have other things to worry about, too. Pipeline capacity to move oil to Gulf Coast refineries and export hubs remains woefully short, limiting the price of the benchmark West Texas Intermedia­te.

Even with his move to upend global trade norms, Trump has largely been good for the U.S. oil industry. Between loosening environmen­tal regulation­s, opening up federal lands and waters for drilling, and reducing corporate tax rates, his presidency reads like the oil lobby’s wish list.

“So far, I like the things he’s done,” Schroeder said. “And you can’t argue with the results.”

“So far, I like the things he’s done. And you can’t argue with the results.” Cactus Schroeder, Chisholm Exploratio­n

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