Republican front-runner’s policy void and attacks on Ted Cruz for taking oil donations alarms sector
Donald Trump is stoking anxiety in the US oil industry as it watches Republicans drive towards nominating a presidential candidate who has offered the sector little affection and few concrete policy proposals.
US oil companies are already being crushed by low crude prices and their woes are being compounded by the spectre of a usually steadfast ally — the Republican party — becoming a vehicle for Mr Trump’s unpredictable candidacy.
The real estate mogul has alarmed the industry with the few statements he has made on oil and gas — including repeated attacks on Ted Cruz, his main challenger, for taking millions of dollars of campaign donations from “big oil”.
But executives and lobbyists say they are equally worried about the uncertainty stemming from the void left by Mr Trump’s apparent lack of policies.
“We don’t really know where he is on a lot of different issues because he doesn’t really give specifics on a lot of different issues,” says Doug Flanders, policy director at the Colorado Oil & Gas Association, a trade group in a state where the shale energy revolution took off.
Similar concerns are voiced privately in a variety of sectors, but they are acute in oil and gas because the industry’s environmental impact and role in energy supply leave it uniquely vulnerable to government regulation.
Kim Hatfield, president of Crawley Petroleum, an Oklahoma oil and gas producer, says: “I’m not sure that the oil and gas industry is necessarily one of [Mr Trump’s] areas of expertise. As he surrounds himself with advisers and gets more into the issues, I would hope that he’d come to a more balanced understanding of the contributions to the economy.”
The shale revolution unleashed by hydraulic fracturing and horizontal drilling has revived the US as an energy superpower and remains the industry’s main animating force, even though the crude glut it created has cut prices by two-thirds since mid-2014 and led to thousands of oil job losses.
Most Republican politicians are still eager to celebrate fracking for delivering cheap petrol, lower electricity bills and reduced reliance on foreign oil. Mr Trump’s rivals — Mr Cruz, a senator from oil-heavy Texas, and Ohio governor John Kasich — have both embraced it and speak from a similar script.
Mr Trump, however, has paid no heed to that orthodoxy. One of his few acknowledgments of the shale boom turned into a jibe. That was in a November debate when Mr Trump said of Mr Kasich: “John got lucky with a thing called fracking, OK? He hit oil. He got lucky with fracking.”
In little-noticed remarks in March, he took a more oil-friendly stance by criticising New York state for banning fracking. But he has not addressed the make-or-break issue of how shale production should be regulated. Mr Cruz and Mr Kasich have vowed to roll back federal rules targeting fracking’s potential impact on air and groundwater, while the Democratic frontrunner Hillary Clinton has vowed to impose tough rules to curtail it.
Louis Finkel, who talks to presidential campaigns on behalf of the oil industry for the American Petroleum Institute, was asked at a media briefing last week about Mr Trump’s views on natural gas, which the US produces in greater volumes than anywhere else. “I’m not sure exactly what Trump has been saying about natural gas,” he replied.
A super-Pac fund backing Mr Cruz, Keep The Promise, received $15m from the billionaire brothers Dan and Farris Wilks
When the New York tycoon does touch on policy, it is often not to the industry’s liking. Oil companies would like to see federal shackles cast off public land to enable more drilling, but the Trump campaign stressed the need to consider “the aesthetics of the land” as well as revenue in comments last week to the American Energy Alliance, a conservative group.
Mr Trump also supports a federal mandate hated by the oil industry, the renewable fuel standard, which requires the mixing of ethanol into petrol.
While Mr Trump boasts about not taking money from special interest groups, the largesse of oil industry donors has flowed elsewhere.
A super-Pac fund backing Mr Cruz, Keep The Promise, received $15m from the billionaire brothers Dan and Farris Wilks, who made a fortune in the Texas fracking boom and are the biggest of a handful of oil donors in a Center for Responsive Politics list of the top 100 funders.
Three other oil donors gave to a fund backing Jeb Bush’s ill-fated campaign — Trevor Rees-Jones, founder of Chief Oil & Gas; Richard Morgan, co-founder of Kinder Morgan, a pipeline company; and Douglas Foshee, former chief executive of El Paso, now part of Kinder Morgan. The donors declined to comment or did not respond to requests for comment.
On one issue — climate change — Mr Trump has staked out positions more in harmony with many in the oil industry. He is sceptical about the existence of human-induced climate change and his campaign says President Barack Obama’s plan to regulate carbon emissions from the power sector is an “over reach”.
Mr Trump got a rare boost from the oil industry last month thanks to Harold Hamm, chief executive of the shale pioneer Continental Resources. Mr Hamm did not offer comment on the candidate’s views on oil or anything else, but said: “He is unstoppable and the Republican Party must unify to help him.”
Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don’t cut articles from FT.com and redistribute by email or post to the web.