President Donald Trump wants lower oil prices and is using his preferred means of communication — Twitter — to spread a message to states like Wyoming that prices must go down in order to help the economy.
In a tweet Wednesday morning, Donald Trump thanked Saudi Arabia for the falling price — making the market shake and Wyoming with it.
“Oil prices getting lower. Great! Like a big Tax Cut for America and the World,” the president wrote.
Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let’s go lower!— Donald J. Trump (@realDonaldTrump) November 21, 2018
It’s a different story in Wyoming. The last year and half has been nothing but good news for the oil industry. Greater than expected global demand and drawdowns of crude stockpiles boosted the already rising price. And with that price bump came much needed activity in the state.
More drillers were applying for wells in the Powder River Basin and down in the gas fields. Each revenue forecast came out with an increase due to better than anticipated oil prices. After the bust that gripped the state in 2015, the improvements were a relief. All those jobs, all that missing revenue, would be a thing of the past if the price held.
And it did, until a few weeks ago, when day by day the national benchmark, West Texas Intermediate, started to retreat.
With more activity planned in Wyoming’s oil plays, and recent hope for the state’s brightening fiscal outlook, the question for Wyoming is whether the oil price fall matters yet. If $70 oil was Wyoming’s savior, what does the president’s celebration of $40 oil mean in the Powder or in the DJ Basin east of Cheyenne? Is $50 oil going to slow the pace of growth and dent Wyoming’s optimism or simply inject the state with a dose of reality?
“People really got on board with high oil prices. That trajectory, it was only going in one direction,” said Rob Godby, director of the University of Wyoming Center for Energy Economics and Public Policy. “I think that the past last six weeks reminds people that oil prices are pretty volatile.”
Trump has had a problem with oil prices for some time, complaining via Twitter that the price was too high back in July. Market watchers weren’t too concerned by the president’s bluster.
The waves lifting the price were global and happening in tandem. The OPEC cartel reduced production and that discipline held. Iran sanctions reinstated by the U.S. caused some to wonder whether production would fall further, while others noted that was unlikely. Meanwhile, global economic growth predictions were higher than anticipated.
And the drawdowns kept coming. There was plenty of supply, but maybe there was demand to meet it.
“The world’s been remarkably stable. The drivers, like global demand, have been growing. We’ve really had synchronized growth in all corners of the world,” said Godby, the UW economist. “Then you look at some of the things that could screw it up … Maybe there was just over exuberance in the oil market.”
Lately, the uncertainty has come from politics and the U.S. president’s claims that he’s pressuring the Saudis to release production and keep the price of oil low.
The price has been falling since early October, based largely on disagreement over supply and demand imbalances. The drop led to promises from the Saudis in early November that the country, the leading voice in the OPEC cartel, would curb production in hopes of breaking the price slide.
Then on Tuesday, amidst continued discord regarding the murder of American resident and Washington Post journalist Jamal Khashoggi in a Saudi consulate in Turkey, Trump put out a statement pledging renewed support for the country.
“The world is a very dangerous place and so is the oil market,” wrote analyst Phil Flynn of the PRICE Futures Group in Chicago in an investors note Wednesday regarding the president statement that oil prices would soar if the U.S. backed out of its relationship to the Saudis, a relationship tied to $450 billion in investment promises from the Middle Eastern nation, according to the president’s statement.
“The comments sent oil prices, already shaky on global economic concerns, even lower,” Flynn noted.
The president has backed the Saudis despite an international outcry over the murder of Khashoggi.
Trump said in his statement that the Crown Prince Mohammed bin Salman claims not to have been responsible for the journalist’s death. Despite the CIA’s investigation that found the journalist was murdered at the order of the crown prince, the president said that bin Salman may have known or may not have known.
“Maybe he did or maybe he didn’t know,” Flynn noted Wednesday, using the president’s noncommittal verbiage. “But what we know for sure was that the oil market was rattled.”
The retreating prices of the last six weeks, and the push from the White House to depress them further, aren’t necessarily a bomb going off for Wyoming’s crude producers.
Hot areas for drilling like the Powder River Basin have become increasingly popular since the price began to steadily increase. But the play itself is not yet at maturity. Private firms like Devon Energy and Samson Resources are invested in the Powder, while a handful of large independents like Anadarko Petroleum, Chesapeake Energy and EOG Resources are directing capital to development, having staked claims since before the downturn.
Their current outlook, though instigated by the price increase, has been strategic and long term.
“The Powder River Basin is now ready to become a meaningful contributor to EOG’s future growth,” said Dave Trice, executive vice president for EOG’s exploration and production, in a call with investors this spring.
Trice noted in an October earnings call that the company’s drilling activity would not likely increase significantly next year, because EOG would focus on laying infrastructure for the Powder’s future.
Meanwhile Chesapeake’s rig count in late fall had reached a pre-bust apex with six rigs operating in the Powder, according to a recent report from EnerCom Inc. — an oil and gas consulting firm based in Denver.
A spike in drilling permit applications largely focused on Wyoming’s Powder River Basin — which hit a record 18,000 this fall — is a signal of producers seeking control of Wyoming drilling rights more than their desire to immediately call in dozens of rigs, experts agree. Still, producers in the Powder are well aware of what cutoff point in price makes the play unprofitable.
“I think producers have always had to see through that volatility,” said Godby, the UW economist. “The smart ones say ’what is the lowest price we can make this play work at. What’s the probability of that happening?’ If you can do it at $30 a barrel, you go in and do the play.”
Nationally, high prices for oil are just another cost for businesses and for consumers. When the price of oil falls, it’s seen as good news for many because the price of gasoline will also fall.
But in Wyoming, a lower price of crude trickles through the entire economy. It means the state and its counties receive less income for every barrel that comes out of the ground. If drilling slows, companies restrict spending, killing the vital sales and use taxes that fund police departments, schools and conservation districts.
“To Wyoming’s overall economy, the negative impact from reduced energy prices [outweigh] the positive impact to consumers,” said Wenlin Liu, chief economist at the Wyoming Economic Analysis Division.
For every $10 change in the price of crude, Wyoming experiences a $120 million boost or plunge in revenue, he said. Of late, oil revenue in particular has grown in importance, representing 37 percent of severance taxes — higher than natural gas or coal, Liu said.
Wyoming has spent two years cutting its budget and slashing funding for state programs as a result of low crude prices. While drilling dried up in the Powder and DJ basins, so did the money that fuels the Cowboy State.
The steady increase in the price of crude was the bright spot on the horizon and the surprise turnaround depressed interest in the taboo subject of new taxes during the Wyoming Legislature’s last budget session.
In October, the state’s annual revenue projections revealed $463 million in unexpected revenue over the next few years.
“The [revenue] report in October was good news, no question about it. Mainly because of the price of crude oil,” said Sen. Eli Bebout, R-Riverton, the CEO of an exploration and production firm in Fremont County.
Bebout was a proponent of cutting spending in Wyoming when the bust hit rather than dipping into savings. The then-Senate president maintained his conservative spending stance during the budget session in February, placing the Senate at odds with the House when it came to taking further swipes at Wyoming’s public schools.
The senator did not expect the price uncertainty to have a dramatic effect on the drilling activity that’s improved revenue expectations. And Wyoming’s energy sector has multiple components. Natural gas prices have recently risen to a four-year high, nearly doubling since September.
That could offset the uncertainty in oil, he said.
But the oil price slide is notable, a reminder that Wyoming needs to focus on broadening the tax base to cushion the state from swings and dips.
“Wyoming should always be concerned about the volatility of commodity prices,” he said. “That’s the history of our state.”
A metal eagle with a 48-foot wingspan now keeps watch over cars as they pass along Wyoming Boulevard in Mills. The stainless steel head and tail gleam in the sunlight and set off the rust patina of steel feathers along the bird’s body and wings.
The sculpture installed last month at Wyoming Boulevard and Second Street is part of planned improvements and beautification to the riverfront area, Mills Mayor Seth Coleman said.
Representing courage and growth, an eagle suits Mills as the town anticipates officially becoming a first-class city after the next census, he said.
“And it just seemed to us to symbolize the changes and the trajectory that the town is on,” he said.
The eagle sculpture was created by artist Todd Berget of Libby, Montana. Mills business owner Rick Bonander of Inter-Mountain Pipe and Threading spotted the sculpture for sale a few years ago outside a business in Kalispell, Montana. Last spring, he pitched the idea of placing the sculpture in Mills to the Town Council.
The Council approved the $75,000 purchase and began fundraising efforts, which are ongoing to cover the sculpture and planned landscaping around it, Coleman said.
The eagle is the first monument sculpture installed Mills, according to the town.
“We all thought it fit real well with what we’re trying to do as far as cleaning up the public spaces and beautifying the public areas throughout town,” Coleman said.
A design for the landscaping project features a terrace around the eagle, a concrete walking path and a parking lot for access to both the sculpture and an existing boat ramp, he said. Town officials wants to raise about $100,000 for the planned improvements, which also include additional parking, a 6-foot precast concrete wall listing donors in steel plates, lighting and flags.
“It goes hand in hand having this eagle here across from what we’re trying to do on the riverfront, and make the riverfront a place for recreation and for restaurants and shops and having something that kind of makes this more of a destination where people would come to see this,” Coleman said.
Several Mills and Casper area residents and businesses have donated money and services to haul and install the 8,100-pound piece, Coleman said.
Berget designed the eagle to come apart and with hidden spots to hook a chain, the sculptor said. The retired teacher, artist and owner of Custom Iron Eagles in Libby, Montana, has so far created 95 eagles since he started in 1997.
“I’ve painted about 120 murals up to date, but I was always a welder, so I wanted to make something,” Berget said. “So I ended up making my first eagle with a friend of mine — it was about a 45-foot wingspan — and had fun doing it. And the rest is kind of history, you would say.”
The eagles range in size from 6 feet across to his largest, the Mills sculpture, he said. The artist believes the Mills eagle also is the largest metal eagle in North America and perhaps South and Central America, he said.
Berget uses scrap metal whenever he can in his sculptures. The Mills eagle’s talons are made from exhaust pipes that an auto body shop couldn’t use, for instance. He created the inner structure out of sprinkler system pipes from a wood mill that was damaged by heavy snow.
His eagle sculptures appear around Libby and in several states, and Berget was pleased when he learned of the Mills eagle — his first in Wyoming, he said.
“I’ll definitely make it down there to see it one of these days,” he said.
Bonander, the Mills business owner who first pushed for the eagle, has been involved in gateway sculpture projects through the Casper Area Chamber of Commerce’s beautification committee, including a bronze monument by Fort Caspar Museum and “Man Made Energy” in east Casper. The eagle caught his attention because it’s spectacular, the price was right and it was available to be installed right away, Bonander said.
Now he drives by the sculpture every day.
“I think it’s awesome, I mean it’s just beautiful,” Bonander said. “And it’s in the perfect position where it’s sky-lighted as you drive down the road from either direction.”
Community response to the eagle has been positive. A video of the installation posted on the Mills Facebook page racked up 13,000 views. The vast majority of comments have expressed appreciation, Coleman said.
A close look at the eagle shows interesting details of its industrial construction, he said.
“It’s stuff that you’d see in a welding shop, and this guy took it and made it into a sculpture,” Coleman said. “Mills has always been an industrial area; it was originally founded to serve the refinery. And so having a sculpture that is very industrial type sculpture seems to fit our community well.”
TIJUANA, Mexico — Hundreds of migrants approaching the U.S. border from Mexico were enveloped with tear gas Sunday after several tried to make it past fencing and wire separating the two countries.
Earlier in the morning, a group of Central Americans staged a peaceful march to appeal for the U.S. to speed up the asylum claims process, but their demonstration devolved as they neared the crossing with the U.S. and some saw an opportunity to breach the border.
According to an Associated Press reporter on the scene, U.S. agents shot several rounds of gas after migrants attempted to penetrate several points along the border. Migrants sought to squeeze through gaps in wire, climb over fences and peel back metal sheeting to enter.
Children screamed and coughed in the mayhem of the tear gas. Fumes were carried by the wind toward people who were hundreds of feet away, not attempting to enter the U.S.
Yards away on the U.S. side, shoppers streamed in and out of an outlet mall.
Honduran Ana Zuniga, 23, said she saw other migrants open a small hole in concertina wire at a gap on the Mexican side of a levee, at which point U.S. agents fired tear gas at them.
"We ran, but when you run the gas asphyxiates you more," she told the AP while cradling her 3-year-old daughter Valery in her arms.
U.S. Customs and Border Protection helicopters flew overhead, while U.S. agents held a vigil on foot beyond the wire fence in California. The Border Patrol office in San Diego said via Twitter that pedestrian crossings have been suspended at the San Ysidro port of entry at both the East and West facilities. All northbound and southbound traffic was halted.
Earlier Sunday, the group of several hundred migrants pushed past a blockade of Mexican police who were standing guard near the international border crossing. They appeared to easily pass through without using violence, and some of the migrants called on each other to remain peaceful.
They carried hand-painted American and Honduran flags while chanting: "We are not criminals! We are international workers!"
Migrants were asked by police to turn back toward Mexico.
Around 5,000 migrants have camped in and around a sports complex in Tijuana after making their way through Mexico in recent weeks via caravan. Many hope to apply for asylum in the U.S., but agents at the San Ysidro entry point are processing fewer than 100 asylum petitions a day.
Irineo Mujica, who has accompanied the migrants for weeks as part of the aid group Pueblo Sin Fronteras, said the aim of Sunday's march toward the U.S. border was to make the migrants' plight more visible to the governments of Mexico and the U.S.
"We can't have all these people here," Mujica told The Associated Press.
Tijuana Mayor Juan Manuel Gastelum on Friday declared a humanitarian crisis in his border city of 1.6 million, which he says is struggling to accommodate the crush of migrants.
Mexico’s Interior Ministry said Sunday it would immediately deport Central American migrants who tried to “violently” breach the border with the U.S. just south of California and that it would reinforce the border.
Meanwhile, Homeland Security Secretary Kirstjen Nielsen said Sunday that U.S. authorities will continue to have a “robust” presence along the Southwest border and that they will prosecute anyone who damages federal property or violates U.S. sovereignty.
U.S. President Donald Trump took to Twitter Sunday to express his displeasure with the caravans in Mexico.
"Would be very SMART if Mexico would stop the Caravans long before they get to our Southern Border, or if originating countries would not let them form (it is a way they get certain people out of their country and dump in U.S. No longer)," he wrote.
Mexico's Interior Ministry said Sunday the country has sent 11,000 Central Americans back to their countries of origin since Oct. 19. It said that 1,906 of them were members of the recent caravans.
Mexico is on track to send a total of around 100,000 Central Americans back home by the end of this year.