The Oil Industry's Double Whammy of Higher Costs and Lower Prices
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What is the main topic discussed in this episode?
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time.
Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wiesenthal.
And I'm Tracy Holloway.
Tracy, I think, at least temporarily, some of the trade-related headlines are quieting down. And so it's sort of time perhaps to understand, I don't want to say new normal, I just don't feel,
that's like
jinxing it a little bit, but like what the new environment looks like for some of the industries that have been whipsawed and affected over recent weeks and months.
Yeah, 90 days for investors, executives, and podcasters to kind of catch their breath and consider the new environment. That's how I would describe it. And then it will probably all change again. It'll
all change. We're never going to run out of fresh material and fresh stories to talk about. You know, there's always this thing. People are always surprised. that there is this phenomenon which seems to occur in markets in which Republican presidents tend to not be great environments for the oil industry.
Like
people think, oh, yeah, here we're going to have this pro-oil president come in. But pro-oil, I don't know what that means. But if it means a more pro-drilling environment, pro-liberalization of energy regulations, then often that means lower prices and less profits. And then you get an environment where you get a Democratic president who wants to constrict expansion, focus more on alternatives, and then profits go up. Anyway, the pattern seems to be repeating now, and oil prices have done pretty badly since the start of the year.
Yeah, so this is something we've been watching. We've been writing about it in the Odd Lots newsletter. There was that great report out from the Dallas Fed, their regular energy survey,
and it
had a bunch of quotes from anonymous oil officials that were really kind of... extreme in various ways. And I think one of them kind of nailed the theme, which is that you can't really have $50 per barrel oil and US energy dominance. It's incompatible in various ways. So I think we should talk about that tension.
We should absolutely talk about the tension in addition to the supply. And we know that OPEC is pumping more. There are all the input costs going up, particularly from tariff affected companies in the U.S. What is it still tubular?
Tubular components, Christmas trees. Those are the little collections of valves and spools.
Yeah. So we're going to get into all that. This double whammy, so to speak. We have seen a bit of a rebound as we're talking about this on April 13th, 2025 at 10.07 a.m. Eastern Time. The price of a generic barrel of West Texas Intermediate, $62.96. I don't know how profitable it is at that level, but we have the perfect guest, someone we spoke to a few years ago when the industry was under very different conditions, but someone who has a very sort of granular understanding of the industry. We're going to be speaking with Peter Terzakian. He's currently the founder and president of Studio.Energy. Previously, he was a managing director at ARK Financial, which did investing in the oil industry. So an expert in the space has written books about the energy industry, energy transition periods and so forth.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–6:25
2
Why are oil prices falling while input costs are rising under the new administration?
6:25–24:14
3
Who is actually making money at the current $62‑$63 per barrel price level?
24:14–37:44
4
How are tariffs on tubular components and steel affecting U.S. drilling costs?
37:44–45:49
Speakers
8 identifiedMore from Odd Lots
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