Sign up for our daily briefing
Make your busy days simpler with the Axios AM and PM newsletters. Catch up on what's new and why it matters in just 5 minutes.
Catch up on the day's biggest business stories
Subscribe to the Axios Closer newsletter for insights into the day’s business news and trends and why they matter.
Sign up for Axios Pro Rata
Dive into the world of dealmakers across VC, PE and M&A with Axios Pro Rata. Delivered daily to your inbox by Dan Primack and Kia Kokalitcheva.
Sports news worthy of your time
Binge on the stats and stories that drive the sports world with the Axios Sports newsletter. Sign up for free.
Tech news worthy of your time
Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.
Get the inside stories
Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Want a daily digest of the top Denver news?
Get a daily digest of the most important stories affecting your hometown with Axios Denver
Want a daily digest of the top Des Moines news?
Get a daily digest of the most important stories affecting your hometown with the Axios Des Moines newsletter.
Want a daily digest of the top Twin Cities news?
Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities
Want a daily digest of the top Tampa Bay news?
Get a daily digest of the most important stories affecting your hometown with the Axios Tampa Bay newsletter.
Want a daily digest of the top Charlotte news?
Get a daily digest of the most important stories affecting your hometown with Axios Charlotte
Want a daily digest of the top Nashville news?
Get a daily digest of the most important stories affecting your hometown with the Axios Nashville newsletter.
Want a daily digest of the top Columbus news?
Get a daily digest of the most important stories affecting your hometown with the Axios Columbus newsletter.
Want a daily digest of the top Dallas news?
Get a daily digest of the most important stories affecting your hometown with the Axios Dallas newsletter.
Want a daily digest of the top Austin news?
Get a daily digest of the most important stories affecting your hometown with the Axios Austin newsletter.
Want a daily digest of the top Atlanta news?
Get a daily digest of the most important stories affecting your hometown with the Axios Atlanta newsletter.
Want a daily digest of the top Philadelphia news?
Get a daily digest of the most important stories affecting your hometown with the Axios Philadelphia newsletter.
Want a daily digest of the top Chicago news?
Get a daily digest of the most important stories affecting your hometown with the Axios Chicago newsletter.
Sign up for Axios NW Arkansas
Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters
Want a daily digest of the top DC news?
Get a daily digest of the most important stories affecting your hometown with the Axios DC newsletter.
Illustration: Rebecca Zisser / Axios
The oil and natural gas industry is running into a rough patch with President Trump.
Why it matters: A Republican president who promotes American energy dominance should be good for oil and gas producers. But instead, conflict is escalating over trade, ethanol and offshore drilling.
“Now that Trump has tax reform, he’s going to be doing things more unilaterally and the concern levels are starting to rise,” said Bob McNally, president of the consulting firm Rapidan Energy Group and former adviser to President George W. Bush.
- Trump is getting ready to likely impose tariffs on steel and aluminum imports.
- He's stuck between competing interests on the ethanol mandate.
- U.S.'s main oil and gas group and administration are at odds over offshore leasing.
- “This administration says it wants energy dominance, but its policies on trade and a number of other issues indicate otherwise,” said one oil industry official.
- Administration officials also privately complain about the industry’s handling of certain issues, like its lack of unity on ethanol and methane regulations, according to multiple industry and Trump officials.
The big picture: The tension threatens to override Trump's positive rhetoric and regulatory rollbacks elsewhere in the administration. Today’s conflicts are more wide-ranging that last year’s main battleground: Energy Secretary Rick Perry’s failed plan to boost coal and nuclear power plant revenues in the name of grid resiliency. Gas producers opposed Perry’s proposal, fearing it would undercut their fuel’s advantage in power markets.
Trump is poised to impose steep tariffs on steel and aluminum imports by mid-April. It'd be a big defeat for major oil and gas companies that lobbied hard against the penalties. They say tariffs will raise pipeline costs because there’s not enough domestic steel available.
"President Trump is committed to achieving fair and reciprocal trade relationships that protect the American worker and grow our economy," Raj Shah, principal deputy press secretary said in a statement to Axios.
The energy industry is also worried about what changes the administration is trying to make to the North American Free Trade Agreement. Causing the most anxiety: Reports that a provision allowing investors to sue countries for alleged discriminatory practices is being scrapped as part of negotiations, which are getting underway in Mexico City this week.
The provision, known as investor state-dispute settlement, is critical to encouraging American companies to keep investing in Mexico’s burgeoning oil industry, according to industry lobbyists.
Eliminating it “would stifle access to capital because people would be unwilling to underwrite transactions if two sides aren’t bound by a common understanding of how you resolve differences,” said Scott Segal, a partner at Bracewell, a firm whose clients include pipeline developers and oil refiners.
In response to industry concerns over this provision, a White House spokesperson noted that NAFTA was put in place 24 years ago, and a lot has changed since then.
"Some sectors of the economy have gained, but others, such as manufacturing, have been harmed," the spokesperson said by email. "The President is committed to a fair deal for all Americans by improving market access in Canada and Mexico for U.S. manufacturing, agriculture, and services."
The Trump administration is caught in a seemingly endless firestorm over a federal ethanol mandate. The White House is expected to hold meetings this week, including with Trump, to discuss to what extent the oil and ethanol industries can agree on changes to the mandate.
The president has consistently expressed support for the policy, which provides jobs in the political battleground and corn-rich Iowa.
The intensity of the fight grew in the wake of a newly announced bankruptcy at a Philadelphia refinery, which is blaming the mandate for its financial woes. The development is pitting Trump between his ethanol allies in Iowa and blue-collar refinery jobs in Pennsylvania, another politically key state. He won both states in the presidential contest.
The policy, which Congress first passed in 2005, requires refineries to blend increasingly large amounts of biofuels, mostly corn-based ethanol, into the nation’s gasoline supply. The oil industry itself is internally divided over the mandate. That’s because some have made investments to comply with it over the past decade more than others.
The White House is frustrated by that lack of unity, which is a factor stalling any resolution to the issue, according to an administration official and multiple industry executives.
“They’re so sick of this issue. I don’t blame them,” said Stephen Brown, a lobbyist at refiner Andeavor. “So is the Hill, reporters having to write the same story over and over, and the folks like us working it.”
That kerfuffle also escalated simmering tensions between the White House and the American Petroleum Institute, according to multiple industry and administration officials. The administration believes the organization didn’t do enough outreach to stakeholders in coastal states like Florida, while API criticized Zinke's reversal.
“We appreciate everyone’s criticism,” API President Jack Gerard told me in response to the administration's critique of API. “The reality is, we’re the ones leading the effort and to date have had good, bipartisan and strong support.”
White House spokespeople declined to comment on the ethanol and offshore leasing developments.
What’s next: More rough patches.
- The tension from the Florida decision is likely to wear on as the Interior Department slogs through its multi-year offshore leasing process.
- No one thinks the latest White House meetings on ethanol will spell the end of that dilemma.
- Trump has until April 11 to decide whether to impose tariffs on steel imports.
“Trump is picking amongst his children, and oil and gas comes last,” said one industry official. “Why is oil and gas the red-headed stepchild?”