Trump Policies Raise Alarm Among Some in Oil Industry

Feb 2, 2017

When Donald Trump was running for president he vowed to boost the U.S. oil and gas industry, much of it found right here in Texas. Now that he’s in office, some of his policies seem aimed at doing just that. But others are having the opposite effect.

Just ask Subhi Khudairi, a partner at the Khudairi Group. The family business has offices in Houston but contracts with oil companies in Iraq. Khudairi was in the Iraqi city of Basra on business when he heard about the Trump administration’s travel ban on people from some Muslim-majority countries.

One of the employees Khudairi was traveling with is an Iraqi man with a U.S. green card and wife and family in the states. That meant they had to take their minds away from business to figure out the employee’s travel situation. 

“He’s just cutting his trip short to get back to the U.S.,” Khudairi said. “We feel like we don’t know what’s going to happen day after day, so we’re just trying to get him home sooner rather than later in case another curveball is thrown at us.”

What worries Khudairi even more than the business disruption is the ill will the ban could generate in Iraq.

“Whether it’s long-term rights to oil concessions or investment opportunities – this may have a longer-term effect on those sorts of opportunities for American companies,” he said.

The oil and natural gas markets are global. So what happens globally with U.S. policy can be more important than what happens domestically. – Michael Maher, Baker Institute’s Center for Energy Studies at Rice University

Michael Maher, who worked at Exxon Mobil for 35 years before he became program adviser at the Baker Institute’s Center for Energy Studies at Rice University, agrees.  

“The oil and natural gas markets are global,” he said. “So what happens globally with U.S. policy can be more important than what happens domestically.” 

Maher said he thinks U.S. oil and gas companies are experiencing a kind of policy whiplash between Trump’s domestic and international agenda.  

“If I looked at rules and regulations for the U.S., some of those are going to be positive for the industry,” he said, listing things like ending financial reporting requirements, approving the Keystone XL pipeline and rolling back environmental regulations.

But Trump’s international agenda – which includes the travel ban, the “ongoing war of words with Mexico,” and the specter of tariffs and trade wars – is deeply troubling.

“There's this idea that we’re going to be more friends with Russia,” he said, “but from an oil and gas future standpoint they’re not as critical to the world as China, because of the pull on demand that China has.”

While some fear business opportunities might dry up overseas, others worry that talent could disappear at home.

Jon Olson, chairman of UT Austin’s Petroleum and Geosystems Engineering Department, said there are a lot of talented students and faculty at UT from countries that are on Trump’s banned list.

“Basically were bringing the best and the brightest from all over the world to study here and then stay here," he said. "They increase the U.S. competitive edge by staying here. A lot of the technology that makes a business work is coming from a lot of international students.”

Back in Iraq, Subhi Khudairi said one final thing that worries him is what might come next.

“Is this the start of many more actions to come? Is this a slippery slope? Where does it end?" he said. "That’s a concern for many of us who are proud to be Americans but also originate from other countries.”

A concern that not only disrupts businesses, but also lives.