(The opinions expressed here are those of the author, a

columnist for Reuters.)

*

Trump's administration vows to support U.S. drillers

*

But low oil prices threaten activity

*

Energy transition shifts to 'energy additions' amid rising

demand

By Ron Bousso

HOUSTON, March 13 - Donald Trump's return to the White

House caused "animal spirits" to soar in the oil and gas sector,

and these vibes were palpable in the halls of the sector's

annual conference in Houston this week. But the industry appears

to be ignoring a central Trump objective: cheap energy.

"We can all feel the winds of history in our industry's sails

again," Amin Nasser, the CEO of Saudi Arabia's national oil

company Aramco, told the CERAWeek conference.

The upbeat mood music at the conference was set from the start

by U.S. Energy Secretary Chris Wright who vowed to bring back

common sense by prioritising cheap energy - shorthand for fossil

fuels - over supposedly inflationary climate-driven policies,

dismissing the need to limit greenhouse gas emissions.

"The Trump administration will end the Biden

administration's irrational quasi-religious policies on climate

change," Wright said. He went on to criticize the "expensive

energy or climate policies" implemented by left-leaning

governments in wealthy nations that leave billions of people in

emerging economies with less access to affordable energy.

While Trump was not in attendance at the conference, his

presence could be felt everywhere. Executives peppered their

public appearances with catch phrases like "make energy great

again" and put forward promises to make multi-billion-dollar

investments in the United States.

Telling the conference "we love you!" U.S. Interior Secretary

Doug Burgum vowed to open up American public land to oil and gas

drillers, underscoring Trump's "drill, baby, drill" ethos. The

United States already became the world's top oil and gas

producer under former President Joe Biden. The U.S. Energy

Information Administration expects crude oil production to rise

to a new record average of 13.61 million barrels per day (bpd)

in 2025 and climb further to 13.76 million bpd in 2026.

But there is an obvious problem here. Trump wants increased

production because he wants lower energy prices - and that

stands in direct opposition to expanding investments in oil and

gas.

The CEO of U.S. producer OXY Energy Services warned that oil

prices below $60 a barrel would likely force small drillers to

reduce activity. And a 2024 industry survey by the Federal

Reserve Bank of Dallas showed that drillers require oil prices

of between $59 and $70 to drill a new well, depending on the

basin.

Benchmark U.S. oil prices are currently around $68 a

barrel.

REALITY CHECK

The U.S. president was not the only force shifting the

narrative in Houston, as energy transition acolytes got a

reality check well before Trump's election.

The surge in energy prices in the wake of Russia's invasion

of Ukraine in 2022 and post-pandemic inflation led companies and

governments to roll back climate targets and investments in

renewables and shift their focus to cheap, reliable sources of

energy.

Executives from both fossil fuel and renewable companies are

now touting the need to shift from "energy transition" to

"energy additions". The current - arguably more realistic - idea

is that continued population growth and the need to lift

standards of living mean there will be rising demand for all

sources of energy. To that effect, liquefied natural gas was the

star of the conference.

The ongoing surge in U.S. LNG production also underpins Trump's

energy dominance agenda by supporting investment in domestic

industry and giving other nations an opportunity to boost their

purchases of U.S. fuel, thereby reducing any trade deficits with

the United States, another major bugbear for Trump.

But, again, abundant energy means growing competition and

lower prices - good for the Trump agenda, but not necessarily

for U.S producers.

Other deep-running trends discussed at the conference

further complicate the energy matrix.

In a panel on China's energy future, speakers agreed that oil

demand in the country, which has been the dominant driver of

energy demand growth over the past two decades, will likely peak

by 2027, as electric vehicle sales increase and economic

activity shifts to less energy-intensive sectors.

And at the same time, executives, including the CEOs of

ConocoPhillips ( COP ) and Occidental, agreed that U.S

shale oil production is set to plateau by the end of the decade.

This huge onshore resource revolutionised the energy sector over

a decade ago and catapulted the United States into its current

position as the world's biggest oil producer.

Enthusiasm over the future of the sector has also been tempered

by increasingly harsh realities on the ground. Turmoil in global

markets fuelled by Trump's tariff zigzagging has weighed on oil

prices and sowed tremendous uncertainty, two factors that

impinge on new investments in the sector.

"Swaying from one experience to another is not the right

policy approach. We need consistent and durable policy," Chevron ( CVX )

CEO Mike Wirth said.

New technological advances, including the emergence of

artificial intelligence, might open new horizons for U.S. oil

and gas production, but that would require energy prices to be

high enough to entice investment.

So the energy industry may have basked in Trump's sun over

the past week, but executives should grow increasingly concerned

about the contradictions in many of the administration's key

policies.

** The opinions expressed here are those of the author, a

columnist for Reuters. **

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(By Ron Bousso

Editing by Marguerita Choy

)