Trump's oil scheme

MS NOW - President Donald Trump will meet with oil executives at the White House on Friday to pitch an ambitious goal that highlights a fundamental problem in his hopes for Venezuela’s oil industry: He wants American oil companies to invest heavily, but get lower prices for their product.

Trump’s aim is to vastly increase oil production in the country to help reduce the global price of oil to around $50 a barrel to ease costs for American consumers. But dramatically increasing oil production in Venezuela will take years, and oil analysts argue that reducing the price of oil to $50 a barrel will make drilling unprofitable.

In Friday’s meeting, Trump hopes to convince the executives to support a plan that would require oil companies to rebuild Venezuela’s dilapidated energy infrastructure, investments that could exceed $60 billion.

“They’re going to rebuild the whole oil infrastructure,” Trump said in an interview on Fox News Thursday night, referring to the oil companies. “They’re going to spend at least $100 billion.”

But executives have expressed deep hesitation about committing capital to a country where they previously lost billions and where profitability remains uncertain, particularly if Trump succeeds in his promise to lower global oil prices.

Axios - The U.S. oil boom — along with a global crude glut and low pump prices — are bolstering Trump's foreign policy ambitions.

• Relying less on imported oil, combined with the soft global market, gives the U.S. an expanded foreign-policy menu.
• So if Trump wants to capture Venezuela's leader — or threaten and bomb Iran — he can do it with much less risk in spiking pump prices at home.

The U.S. has nearly tripled oil production over the last 15-ish years, thanks to fracking unlocking vast reserves of oil and natural gas in shale rock formations in Texas and several other states.

• The U.S. is now — by far — the world's top producer at nearly 14 million barrels per day.
• "The shale revolution has certainly brought a sense of confidence and security that wasn't there when the U.S. was the largest importer of oil," oil historian and S&P global vice chairman Dan Yergin said in an interview....

Analysts say that while interest and risk tolerance will vary by company, overall the biggest and more expert players will hesitate to spend big sums in Venezuela.

• That's especially true for any near-term efforts, when profitably producing from Venezuela would be tough.
• "Prices are certainly a big issue. At $60 per barrel, Venezuela's oil isn't profitable. This is some of the highest-cost oil to produce," oil analyst Ellen Wald said in an interview.
• And, she notes, Trump's goal is to push prices downward.

She cited another reason for industry's hesitation: Even if Trump dangles financial incentives, a future president could always pull them back.

• While she's skeptical, Wald doesn't rule out U.S. producers — who think in multi-decade cycles — becoming open to investing in long-term projects if Venezuela's political situation stabilizes.
• Mike Sommers, head of the American Petroleum Institute, told Fox News yesterday that companies will require security guarantees and stable governance to take the plunge.

Treasury Secretary Scott Bessent yesterday pushed back on the idea that oil companies are not immediately interested.

• He told an audience in Minnesota that phones are "ringing off the hook" with calls from independent oil companies and "wildcatters."
• The FT has more on smaller players wanting in.  More

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