THE ECONOMIST: ‘If I'm not president, you're f…ed' Oil firms frack around & find out under Donald Trump slump
'If I'm not president, you're f…ed.' So Donald Trump reportedly told a roomful of oil bosses gathered at Mar-a-Lago after his re-election. During the campaign Mr Trump sought to position himself as the American oil industry's only hope against the supposedly hydrocarbon-hating Democrats — brushing aside the fact that domestic oil production rose sharply during Joe Biden's time in office. Since his arrival in the White House, he has set about rolling back environmental regulations and expedited permitting in an effort to get America's oilmen to 'drill, baby, drill'.
With his trade war, however, the president has also trampled on global demand for hydrocarbons. Since he returned to the Oval Office, the benchmark West Texas Intermediate oil price has fallen from $US80 a barrel to $US60 ($93). That is a problem for the country's shale patch, which accounts for around two-thirds of domestic output — and for smaller producers in particular, who have been among the president's most enthusiastic backers.
Today's price is troublingly low for America's shale drillers. Matthew Bernstein of Rystad, a consultancy, calculates that, on average, they need an oil price of around $US63 a barrel to cover their production costs, overheads, debt interest and dividends. On May 5 Diamondback Energy, one big shale firm, said that it was slashing its production target for the year and cutting capital spending by $US400m. Others including Coterra Energy, EOG Resources and Matador have also announced plans to reduce drilling. 'We are at a tipping-point for US oil production,' says Travis Stice, Diamondback's boss. 'If these prices persist for a year, US oil production will decline,' warns Ben Dell of Kimmeridge, a private-equity firm focused on energy.
In addition to weighing on prices, Mr Trump's tariffs are also raising costs for oil businesses. Tariffs on steel products such as drilling pipes, casings and tanks are of particular concern for the industry.
All this is especially worrying for smaller producers. Thanks to a recent wave of consolidation, oil giants such as BP, Chevron and ExxonMobil account for roughly 60 per cent of American shale output, notes Scott Gruber of Citigroup, a bank. Smaller independent firms tend to have less productive wells and higher costs. Unlike the giants, they lack the bargaining power to force suppliers to absorb the impact of tariffs. Capital to help weather the storm tends to be harder to access, and costlier, and the smaller firms are typically not diversified beyond American shale. So far at least, BP, Chevron and Exxon have announced no plans to cut production.
Nonetheless, little oil remains far more full-throated than big oil in its support for Mr Trump. The giants are not enthused by the president's proposal to axe his predecessor's subsidies for carbon-capture and hydrogen technologies, which they have been investing in. Exxon recently said it would spend up to $US30b by 2030 on such low-carbon endeavours.
That contrasts with the enthusiasm for Mr Trump among smaller oil firms. Their godfather is Harold Hamm, a shale billionaire from Oklahoma who backed the president's campaign and persuaded Mr Trump to name Christopher Wright, his protégé and a fellow shale driller, as America's secretary of energy.
Mr Hamm recently convened a secretive meeting of oilmen in Tulsa, supposedly to promote the use of natural gas to power data centres for artificial intelligence. Insiders say that plans were hatched to tilt the federal regulatory playing field to advantage fossil fuels over renewables. Four members of Mr Trump's cabinet were reportedly present at the gathering. Despite the pain brought on by his trade war, little oil still has big hopes for Mr Trump's presidency.
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The Age
an hour ago
- The Age
He's still alive – seemingly with 400kg of uranium. What will Iran's supreme leader do next?
The second objective – degrading Iran's military – looks to have been a roaring tactical success, although both the Iranians and Israelis will keep the details of the destruction secret. But it is clear Iran's military has taken a mauling. But the first and most important objective – and the only one shared by the United States – is shrouded in uncertainty. No one seems to know how badly the bombing damaged Iran's enrichment and processing facilities. No one seems to know the location of Iran's 400 kilograms of 60 per cent-enriched uranium – enough for almost a dozen bombs. And nor is it clear that all Iran's nuclear facilities were even known to the Israelis. 'I'm sure they have a hidden place somewhere with some hundreds, if not thousands, of centrifuges, and they have material all there in several places all over Iran,' Sima Shine, a former head of Mossad, Israel's overseas intelligence service, told the London Telegraph. 'They cannot do anything now, tomorrow, but in the future, they have all the capabilities [to build a bomb].' More important of all is political calculus. 'I told you so' For years, hardline Iranian commanders have urged Khamenei to stop procrastinating and just build a damned bomb. No other deterrent, they argued, could protect the regime from American or Israeli attack. Until now, Khamenei has resisted those calls, instead hoping that just the ability to build a bomb could provide a deterrent while avoiding the costs of actually doing so. With the 12-day war proving that theory useless, the weaponeers will now feel vindicated and will push their views even harder in Tehran. 'It's exactly the kind of debate that [they will] have at the Supreme National Security Council in Iran, and the supreme leader will have to decide about it,' says Citrinowicz. 'If you had asked me before this, I would say Khamenei will not, during his lifetime, instruct the scientists to build a nuclear bomb because he understands that the price is too grave. But now they have already paid the price. Do they want to continue to pay future prices? They don't want to be exposed to the mercy of the West.' The backlash Loading In Iran, a backlash against nuclear co-operation with the international community is already under way. The Speaker of Iran's parliament, Mohammad-Bagher Ghalibaf announced on Tuesday that MPs were 'seeking to pass a bill that will suspend Iran's co-operation with the [International Atomic Energy] Agency (IAEA) until we receive concrete assurances of its professional conduct as an international organisation'. Previously, such rhetoric might have been seen as largely theatrical, rather than evidence of imminent intent to weaponise. But 'everything we thought we knew about Iran has been changed by this war,' says Citrinowicz. 'Until the current war, Iran preferred to do everything by its own capabilities,' he says. 'But if they understand that they need something quick, they might change their nuclear strategy regarding that, and prefer to buy a bomb. For example, from North Korea.' The North Korean model North Korea may provide inspiration in other ways. After the United States invaded Iraq in 2003, Iran shelved its nuclear weapons programme to avoid a similar fate. Libya's Muammar Gaddafi did the same. But North Korea, the third member of George W. Bush's 'axis of evil' after Iran and Iraq, instead doubled down, and in 2006, tested its first nuclear weapon. The subsequent fates of those regimes have been very different. Gaddafi was killed by an uprising backed by NATO in 2011. Iran has just been bombed comprehensively by Israel and America. From the point of view of regime survival, perhaps Kim Jong-il and his son Kim Jong-un made the right choice. But can Iran replicate its nuclear dash? In many ways, Iran is – or was – well ahead of the North Korean starting point. It has already mastered domestic uranium enrichment and has studied weaponisation. It has a large domestic resource of scientists trained in nuclear physics. And it already has a chunk of highly enriched material to start working with. The North Koreans, by contrast, began by building a plutonium bomb with material bred in an ordinary nuclear reactor – a technology they learnt from the Soviets. That is a complicated, painstaking process that limited them to building one bomb a year. It was only later, with information bought from a corrupt Pakistani scientist, that they mastered uranium enrichment and were able to churn out simpler and quicker to build uranium-based bombs. If Sima Shine is right that the Iranians have managed to preserve some centrifuges, they could spin up their 400 kilograms of 60 per cent enriched material to weapons-grade 90 per cent in just a couple of days. The tricky bit is moulding the fissile material into the right shape and fitting it with an explosive charge and a neutron initiator designed to provoke a chain reaction at just the right moment. Once the mechanism is built, it must be fitted onto a warhead and mounted on a delivery system – in Iran's case, a Shahab-3 liquid-fuelled ballistic missile. Those are fiddly engineering problems, but ones that Iran is known to have already made progress on, says David Albright, a former weapons inspector. 'They have some challenges in finishing up the design and other development steps. So I think six months is what they would need from start to finish' to make the actual weapon, and maybe 'several more months' to mount it on a missile, he told The Telegraph before the American attack on Fordow. 'The weapon-grade uranium part could be done very quickly and probably would be done toward the end of that six months,' he adds. There is another lesson from North Korea, he says. 'The Iranians designed their bomb so that it wouldn't need a nuclear test in order to have assurance it would work. But they may indeed test one if they wanted to assert their nuclear status. Loading 'North Korea did that same kind of programme, and it fired at one-tenth of the expected yield. So you can make a mistake. In the North Korean case, they then saw their mistake and corrected it. The same thing could happen to Iran. That's why I think it takes longer than a couple of months from start to finish on the design. I mean, they have to be careful because things can misfire.' Iran's missile forces have also been decimated by Israeli strikes, so it is unclear how many Shahab missiles they still have, or how quickly they could build more. Israeli officials have claimed the bombing raids set the Iranian nuclear program back by up to two years. But can Khamenei wait that long? North Korea is believed to have sold nuclear weapons technology in the past. Specifically, it provided the technology for the Syrian reactor at Al Kibar that Israel destroyed in 2007. It is the only country known to have done so, says Citrinowicz, making it the logical candidate for the Iranians to approach, especially given both countries' alliance with Russia in Ukraine. Rule nothing out But there is a big problem. All of this would depend on the Iranian nuclear programme remaining so secret that neither Israel nor America could discover it and destroy it. Given the level of intelligence penetration Iran suffered over the past two weeks, there is no guarantee of that. Loading 'I'm not saying this is going to happen, but I'm saying that we have to look outside the box. We have to be ready for the unexpected,' says Citrinowicz. 'Everything that we knew about Iran changed dramatically after our attack. In this situation right now, we cannot rule out anything.' The Telegraph, London
Sydney Morning Herald
an hour ago
- Sydney Morning Herald
He's still alive – seemingly with 400kg of uranium. What will Iran's supreme leader do next?
The second objective – degrading Iran's military – looks to have been a roaring tactical success, although both the Iranians and Israelis will keep the details of the destruction secret. But it is clear Iran's military has taken a mauling. But the first and most important objective – and the only one shared by the United States – is shrouded in uncertainty. No one seems to know how badly the bombing damaged Iran's enrichment and processing facilities. No one seems to know the location of Iran's 400 kilograms of 60 per cent-enriched uranium – enough for almost a dozen bombs. And nor is it clear that all Iran's nuclear facilities were even known to the Israelis. 'I'm sure they have a hidden place somewhere with some hundreds, if not thousands, of centrifuges, and they have material all there in several places all over Iran,' Sima Shine, a former head of Mossad, Israel's overseas intelligence service, told the London Telegraph. 'They cannot do anything now, tomorrow, but in the future, they have all the capabilities [to build a bomb].' More important of all is political calculus. 'I told you so' For years, hardline Iranian commanders have urged Khamenei to stop procrastinating and just build a damned bomb. No other deterrent, they argued, could protect the regime from American or Israeli attack. Until now, Khamenei has resisted those calls, instead hoping that just the ability to build a bomb could provide a deterrent while avoiding the costs of actually doing so. With the 12-day war proving that theory useless, the weaponeers will now feel vindicated and will push their views even harder in Tehran. 'It's exactly the kind of debate that [they will] have at the Supreme National Security Council in Iran, and the supreme leader will have to decide about it,' says Citrinowicz. 'If you had asked me before this, I would say Khamenei will not, during his lifetime, instruct the scientists to build a nuclear bomb because he understands that the price is too grave. But now they have already paid the price. Do they want to continue to pay future prices? They don't want to be exposed to the mercy of the West.' The backlash Loading In Iran, a backlash against nuclear co-operation with the international community is already under way. The Speaker of Iran's parliament, Mohammad-Bagher Ghalibaf announced on Tuesday that MPs were 'seeking to pass a bill that will suspend Iran's co-operation with the [International Atomic Energy] Agency (IAEA) until we receive concrete assurances of its professional conduct as an international organisation'. Previously, such rhetoric might have been seen as largely theatrical, rather than evidence of imminent intent to weaponise. But 'everything we thought we knew about Iran has been changed by this war,' says Citrinowicz. 'Until the current war, Iran preferred to do everything by its own capabilities,' he says. 'But if they understand that they need something quick, they might change their nuclear strategy regarding that, and prefer to buy a bomb. For example, from North Korea.' The North Korean model North Korea may provide inspiration in other ways. After the United States invaded Iraq in 2003, Iran shelved its nuclear weapons programme to avoid a similar fate. Libya's Muammar Gaddafi did the same. But North Korea, the third member of George W. Bush's 'axis of evil' after Iran and Iraq, instead doubled down, and in 2006, tested its first nuclear weapon. The subsequent fates of those regimes have been very different. Gaddafi was killed by an uprising backed by NATO in 2011. Iran has just been bombed comprehensively by Israel and America. From the point of view of regime survival, perhaps Kim Jong-il and his son Kim Jong-un made the right choice. But can Iran replicate its nuclear dash? In many ways, Iran is – or was – well ahead of the North Korean starting point. It has already mastered domestic uranium enrichment and has studied weaponisation. It has a large domestic resource of scientists trained in nuclear physics. And it already has a chunk of highly enriched material to start working with. The North Koreans, by contrast, began by building a plutonium bomb with material bred in an ordinary nuclear reactor – a technology they learnt from the Soviets. That is a complicated, painstaking process that limited them to building one bomb a year. It was only later, with information bought from a corrupt Pakistani scientist, that they mastered uranium enrichment and were able to churn out simpler and quicker to build uranium-based bombs. If Sima Shine is right that the Iranians have managed to preserve some centrifuges, they could spin up their 400 kilograms of 60 per cent enriched material to weapons-grade 90 per cent in just a couple of days. The tricky bit is moulding the fissile material into the right shape and fitting it with an explosive charge and a neutron initiator designed to provoke a chain reaction at just the right moment. Once the mechanism is built, it must be fitted onto a warhead and mounted on a delivery system – in Iran's case, a Shahab-3 liquid-fuelled ballistic missile. Those are fiddly engineering problems, but ones that Iran is known to have already made progress on, says David Albright, a former weapons inspector. 'They have some challenges in finishing up the design and other development steps. So I think six months is what they would need from start to finish' to make the actual weapon, and maybe 'several more months' to mount it on a missile, he told The Telegraph before the American attack on Fordow. 'The weapon-grade uranium part could be done very quickly and probably would be done toward the end of that six months,' he adds. There is another lesson from North Korea, he says. 'The Iranians designed their bomb so that it wouldn't need a nuclear test in order to have assurance it would work. But they may indeed test one if they wanted to assert their nuclear status. Loading 'North Korea did that same kind of programme, and it fired at one-tenth of the expected yield. So you can make a mistake. In the North Korean case, they then saw their mistake and corrected it. The same thing could happen to Iran. That's why I think it takes longer than a couple of months from start to finish on the design. I mean, they have to be careful because things can misfire.' Iran's missile forces have also been decimated by Israeli strikes, so it is unclear how many Shahab missiles they still have, or how quickly they could build more. Israeli officials have claimed the bombing raids set the Iranian nuclear program back by up to two years. But can Khamenei wait that long? North Korea is believed to have sold nuclear weapons technology in the past. Specifically, it provided the technology for the Syrian reactor at Al Kibar that Israel destroyed in 2007. It is the only country known to have done so, says Citrinowicz, making it the logical candidate for the Iranians to approach, especially given both countries' alliance with Russia in Ukraine. Rule nothing out But there is a big problem. All of this would depend on the Iranian nuclear programme remaining so secret that neither Israel nor America could discover it and destroy it. Given the level of intelligence penetration Iran suffered over the past two weeks, there is no guarantee of that. Loading 'I'm not saying this is going to happen, but I'm saying that we have to look outside the box. We have to be ready for the unexpected,' says Citrinowicz. 'Everything that we knew about Iran changed dramatically after our attack. In this situation right now, we cannot rule out anything.' The Telegraph, London
Sky News AU
an hour ago
- Sky News AU
Section 899 of Trump's Big Beautiful Bill makes US assets ‘less attractive' to Aussie investors
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