At the largest US energy industry conference this week, executives said Donald Trump’s chaotic policymaking and abrupt decision to attack Iran have created instability, price volatility and the spectre of recession.
Though the past year under the Trump administration has been a boon for the fossil fuel industry, several said growing uncertainty could soon translate into a block for future investments and economic growth.
Lawrence Coben, chief executive of NRG, a power producer, told the FT that Americans have been told the war in Iran would last only a short time but it was unclear if that would actually be the case.
“It’s very difficult to predict what’s going to happen as our president has a habit of changing his mind,” he said in an interview at CeraWeek in Houston.
“If this lasts another three months then I think people will really start changing their decision-making processes in a big way as we move towards a recession. I think people get more reluctant to invest,” he said.
Coben’s comments mirror those of other senior energy executives at the conference, although most did not agree to be named over concerns their businesses could face retribution for criticising the administration.
“The ability for people to invest or see through the cycle is now even more challenging than it was before, because he [Trump] is very scattergun with his approach,” said a senior gas executive based outside the US.
He said the president’s interventions in Iran and Venezuela had “turned inside out what he previously told the market” given his previous comments about avoiding conflicts with other countries.
CeraWeek, which attracts more than 10,000 industry executives from all over the world, has been dominated by discussion of the Iran war and concerns about its impact on the world economy and energy industry. The closure of the Strait of Hormuz, the narrow waterway through which a fifth of global oil supplies flow, has alarmed executives, who fear it could have a lasting impact on the oil and gas industry.
US energy and interior secretaries Chris Wright and Doug Burgum met industry executives for dinner on Sunday and attempted to soothe fears as oil prices surged above $100 a barrel. Wright told the conference prices had not risen enough to drive “meaningful” demand destruction, adding that the conflict was one the US could not “kick down the road”.
Most oil and gas executives support the Trump administration’s policies aimed at boosting the fossil fuel industry, including sweeping away regulations and environmental policies. But they would also like to see a more consistent approach, and some fear the partisan stance on energy policies, including attacks on renewable energy, could leave the industry vulnerable if a Democrat president is elected.
Coben, who is due to stand down as chief executive and chair of NRG on April 30, said the Trump administration was “pro-investment,” but “instability” in policymaking was undermining that objective. He cited Trump’s tariffs and the targeting of fully permitted offshore wind farms as examples of “variable” policymaking, which he said was greater than occurred under the previous administration led by President Biden.
On Monday the Trump administration announced that it would pay TotalEnergies almost $1bn to pull out of offshore wind in the US and invest instead in oil and gas production. It follows a failed legal campaign aimed at blocking several wind farms off the US east coast.
“There’s a particular aversion in this administration because of an offshore wind project that was off a golf course in Scotland,” said Coben, referring to Trump’s legal battle against an offshore project in Aberdeenshire in 2013.
Sandhya Ganapathy, chief executive of EDP Renewables North America, said policy uncertainty for renewable energy is undermining business confidence: “It’s ironic because on the one side demand is better than ever before. But on the other hand we have one headwind after another, whether it’s the administrations position on permitting, particularly of wind, or tariffs.
“How do developers and capital deployers wrap our heads around it? It’s sort of a conundrum,” she said.
Christopher Guith, senior vice-president at the Global Energy Institute, part of the US Chamber of Commerce, said the current level of uncertainty was “rarely seen in history” due to the combination of policy changes, alongside the geopolitical instability of the war.
“Business craves certainty. So from a macro policy level, when you have a pendulum swinging so widely between administrations, it makes it very difficult to make multibillion-dollar capital allocation decisions,” he said.
A White House spokesperson did not immediately respond to a request for comment.
Some executives said inconsistent policymaking was a factor in many parts of the world and not only in the US.
“We have seen tax changes in the UK, we saw tax changes in Brazil. We see polarisation in energy projects: we have seen it in Norway, we have seen it in the UK, we have seen it in the US, and so on,” said Anders Opedal, Equinor chief executive.
“We advocate for stable conditions because every time we see that is varying the bar for new investments always rises . . . if you are uncertain you stop that investment.”
Additional reporting by Leslie Hook
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