Should You Buy Energy Stocks Hand Over Fist With Trump in the White House? Maybe Not, According to a Recent Survey of Oil Execs.

Many oil and gas industry executives enthusiastically supported President Donald Trump's bid for a second term as U.S. president. The first Trump administration was distinctly pro-energy. It wasn't surprising, therefore, that energy stocks soared immediately following Trump's victory in the November 2024 election. But should you buy energy stocks hand over fist with Trump in the White House? Maybe not, according to a recent survey of oil executives. "Chaos" and "uncertainty" Last month, the Federal Reserve Bank of Dallas surveyed oil and gas industry executives. The survey respondents included the leaders of 88 exploration and production companies and 42 oilfield services providers. One striking result from this survey was that 60.8% of oil executives reported an increase in uncertainty. Another 21.5% said there was no change in uncertainty, with only 17.7% indicating a decrease. This surge in uncertainty also appeared to affect executives' perspectives on the near-term future of their companies. More reported a worsening outlook (31.1%) than said their outlook was improving (26.2%). Perhaps the biggest shocker about the Dallas Fed's survey, though, was the intensity of the anonymous comments. One executive stated, "The administration's chaos is a disaster for the commodity markets." Another respondent agreed, saying, "The political climate caused by the new presidential administration appears to be creating instability. Energy markets are not exempt from the loss of public faith in all markets." Increased uncertainty was a common theme in the comments. An oil executive opined, "The key word to describe 2025 so far is 'uncertainty' and as a public company, our investors hate uncertainty." Another expressed frustration, stating, "I have never felt more uncertainty about our business in my entire 40-plus-year career." One summed things up by saying, "The only certainty right now is uncertainty." Challenges for energy stocks The concerns voiced by respondents to the recent Dallas Fed survey highlight real challenges for energy stocks right now. While President Trump's commitment to deregulation can help the oil and gas industry, some of his other policies could be problematic. The biggest issue is arguably the potential impact of the Trump administration's tariffs. Some economists predict that steep tariffs will lead to slower economic growth. That's bad news for energy companies because the demand for oil and gas could fall in an economic slowdown. Tariffs could also increase costs for some oil and gas companies. As one survey respondent commented, "The administration's tariffs immediately increased the cost of our casing and tubing by 25 percent." However, another oil executive said, "I don't believe the tariffs will have a significant effect on drilling and completion plans for 2025." President Trump's desire to dramatically increase domestic oil and gas production could hurt the industry, too. His administration wants "energy dominance" for the U.S. and has openly discussed $50-per-barrel oil. However, one survey respondent explained, "There cannot be 'U.S. energy dominance' and $50 per barrel oil; those two statements are contradictory. At $50-per-barrel oil, we will see U.S. oil production start to decline immediately and likely significantly (1 million barrels per day plus within a couple quarters). This is not 'energy dominance.'" Not all energy stocks are alike If you thought energy stocks were slam-dunk buys during a second Trump administration, think again. The views of industry insiders explain why. However, not all energy stocks are alike. Larger oil and gas producers are better positioned to weather the instability than smaller companies. For example, Chevron's (CVX -8.37%) share price has performed especially well year to date, reflecting investors' confidence in its prospects. It doesn't hurt that Chevron is optimistic that the planned acquisition of Hess will close later in 2025. Chevron recently spent over $2 billion buying 5% of Hess' shares. The deal is currently in arbitration. Midstream energy companies could also fare relatively well despite the uncertainty created by the White House's policies. Enterprise Products Partners (EPD -7.86%), which operates over 50,000 miles of pipeline in the U.S., is a good example. Its stock has jumped around 9% year to date while the overall market has floundered. Much of Enterprise Products Partners' business focuses on transporting natural gas and natural gas liquids. As one Dallas Fed survey respondent commented, "Natural gas is very positive."