Trump's 'Drill, Baby, Drill' Mantra May Fizzle In World Market

President-elect Donald Trump's vow to "drill, baby, drill" that has made environmental advocates shudder may fizzle on the world market — and become a double-edged sword for oil companies, according to a report.

Trump may want more oil than a glutted market.

The Trump administration is poised to relax regulations to give companies more opportunities to drill on federal land and to increase exports of natural gas, the New York Times reported.

But policies that significantly increase U.S. oil production — already the highest in the world — could ultimately result in lower prices and corporate earnings, the report said.

Some executives say the risk of falling prices may be worth it if Trump makes it easier to sell energy overseas while increasing demand for oil and gas.

"We're willing to trade short-term downside for long-term certainty," Steve Pruett, chief executive of Elevation Resources, an oil and gas producer in Texas, told the Times.

Energy stocks, which surged on Wednesday, lost some of the gains amid caution in the market over what effect Trump's policies will have on the sector.

Harold Hamm, executive chairman of Continental Resources, called Trump's victory "a monumental win for American energy."

"President-elect Trump has been a steadfast champion of deregulation and unleashing the power of domestic energy production," Hamm, who contributed to the Trump campaign, told the Times.

Trump will begin his second administration amid uncertainty in the global oil market. Companies may find they are producing more oil than the world needs, the report said.

And while oil prices have fallen roughly 10% from a year ago as production has increased, they are still high enough to be profitable.

The United States was producing 13.4 million barrels a day in August, a 20 percent increase since Trump left the White House in January 2021 when prices and demand were lower because of the COVID-19 pandemic, according to the Times.

Oil prices have been falling, leading to smaller corporate profits and reducing costs at the pump, which now average about $3.11 a gallon for regular.

Natural gas prices have fallen as well.

While presidents have limited ability to alter the global energy market, executives are hoping that his policies will facilitate building more pipelines and getting permits for new natural-gas export terminals, the New York Times reported.

Trump also is expected to make it easier to obtain leases to drill for oil and gas on federal lands.

"The scale of production growth might depend more on market dynamics and investor appetites, but cost structures could improve," analysts at ClearView Energy Partners, a research firm based in Washington, wrote, referring to Trump's impact on the industry.