The secretary of energy of Unites States, Chris Wright, delivers a speech in the framework of the … [+] Ceraweek by S&P Global energy conference in Houston, Texas, on March 10, 2025. Top energy industry figures converge on Houston this week for their biggest gathering since Donald Trump returned to the White House to champion fossil fuels and undo Joe Biden’s climate legacy. (Photo by RONALDO SCHEMIDT / AFP) (Photo by RONALDO SCHEMIDT/AFP via Getty Images)
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The big newsmakers at the opening day of the annual CERAWeek conference in Houston Monday were Energy Secretary Chris Wright and Amin Nasser, president and CEO of Saudi Aramco. On the surface, both Nasser and Wright spoke optimistically about the immediate future for the oil and gas industry, but a closer examination reveals what could become a rocky road ahead.
Nasser Says ‘The Winds Of History’ Favor Oil
Nasser kicked off his speech on a high note, telling attendees that, “We can all feel the winds of history in our industry’s sails again.” He bases that view on the collapsing narratives pushed over the last 5 years by proponents for the energy transition, whose conceit has been that governments can, by spending trillions of dollars annually in alternative energy subsidies, force a complete revamping of the global energy system.
For the past half-decade, the transition’s proponents in global organizations like the United Nations, the World Economic Forum, the International Energy Agency, and the European Union, along with national governments in the U.S., the United Kingdom, Germany, and France, have assured a largely skeptical public that we can wean our economies off of fossil fuels and replace them with wind, solar, green hydrogen, and electric vehicles, and do it all by 2050. As Nasser notes, this narrative has pretty much collapsed over the past year.
“There is more chance of Elvis speaking next than the current plan working,” he declared, adding that the last two years have been “a painful awakening for those who thought energy affordability and security could be taken for granted. Europe is paying roughly double for electricity compared with five years ago, and 3 to 4 times that of the U.S. and China.”
Saudi Aramco President & CEO Amin Nasser speaks during the CERAWeek oil summit in Houston, Texas, on … [+] March 18, 2024. (Photo by Mark Felix / AFP) (Photo by MARK FELIX/AFP via Getty Images)
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Nasser called the notion that a subsidized transition can be accomplished in a secure and affordable manner “a fiction,” noting that, “some countries are losing their industrial base and jobs as companies consider relocating to stay competitive, or shut down.” He went on to point out that the poorest 7 billion of the earth’s 8 billion people “have received just 15 percent of energy transition investments, while technology transfer and capacity building levels are far too low,” adding that, “new sources cannot even meet the growth in demand, while the proven sources needed to fill the gap are demonized and discarded.”
In conclusion, the Aramco CEO urged the audience and policymakers to “stop reinforcing failure. Indeed, as the fictions of the promised transition finally wash away, there is an historic opportunity to change course. So let’s shape an energy future the world actually wants, can actually afford, and can actually reach, including climate goals.”
Wright Presses For Lower Oil Prices
Secretary Wright echoed some of Nasser’s themes in his own speech to the assembly, promising that, “Trump administration will end the Biden administration’s irrational, quasi-religious policies on climate change that imposed endless sacrifices on our citizens,” and dismissing Biden’s focus on enacting the energy transition narrative as “myopic.”
Wright called Biden’s policies “economically destructive to our businesses and politically polarizing,” adding that, “the cure was far more destructive than the disease.”
Comments like that, along with the Secretary’s commitment to enact President Donald Trump’s “Energy Dominance” agenda, with oil and gas at center stage, were well received by the audience largely made up of energy executives and contractors.
But then came the rub, the part at which Secretary Wright says he believes shale producers can continue to increase U.S. production even if oil prices drop to $50 per barrel.
Alleging that “the last administration recklessly implemented policies that would surely drive-up electricity prices,” Wright pointed to the fact that, “more than 20% of Americans are struggling to pay their energy bills and approximately 10% have received a utility disconnection notice in the past 12 months.”
Because of that and other inflationary pressures impacting the U.S. and global economies following half a decade of profligate money printing, the Trump administration believes oil prices must come down into the $50 per barrel range at least in the short term. In his speech, Wright said this is “in the best interest of the American people, and honestly, the citizens of the world.”
The Implications For The Global Oil Industry
But is a lower oil price – 30 percent lower than today’s prices – in the best interest of the oil industry? Can U.S. shale producers really keep up Wright’s and Trump’s desired “drill, baby, drill” agenda, raising overall domestic production even at $50 oil? That seems unlikely.
Sure, some of the big players in the prolific Permian Basin can maintain profitable drilling at $50 per barrel. But take a look around the country’s other major shale plays which do not enjoy the big advantages related to geology and economies of scale that have made the Permian the most active drilling basin for a decade.
The Bakken play in North Dakota has already peaked and is in decline. The prime locations in the Eagle Ford Shale in South Texas have pretty much all been drilled up. Colorado’s Denver/Julesburg Basin is also in decline due largely to oppressive permitting challenges from an increasingly hostile state government. Producing companies can maintain decent drilling programs at $70 oil, but most of the currently active rigs would quickly go dormant at $50 per barrel.
Here, it is important to consider the setting and context in which Sec. Wright delivered his remarks. He wasn’t speaking just to producers in the domestic oil and gas industry – he was also speaking to Mr. Nasser and the ministers of countries who make up the OPEC+ oil cartel. By emphasizing the belief that the U.S. domestic industry can remain strong and productive at $50 oil prices, Wright puts pressure directly on OPEC+ countries to move in the coming months to cut their own production to try to support higher prices they need to maintain their national welfare states.
The Bottom Line
What we see at play here is a game of international chess. Wright and the Trump administration want substantially lower oil prices in the near term to try to break the cycle of inflation but know prices will need to go back up to profitable levels in the longer term to maintain a vibrant domestic industry.
To execute this oil price two-step dance, the Trump White House will need OPEC+ to follow its lead, whether willingly or unwillingly. The final steps in this dance will play out in the months to come. We do live in interesting times.
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