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A double whammy of presidential policies — more OPEC output and historic trade levies — are sending fossil stocks tumbling.
President Donald Trump campaigned on a promise to “drill, baby, drill” and help the American oil and natural gas industry. Executives loved it — the industry gave more than $75 million to Trump’s campaign and its affiliated groups.
Now the trade is blowing up in their faces. This week, the president accomplished two of his biggest goals — and the result has slammed the oil industry and imperiled its near-term future. The U.S. oil and gas industry has now stopped growing — and may even lurch into a recession — and there’s no sign yet that Trump or any of the oilmen surrounding the president have noticed.
The double whammy began on Wednesday, when Trump announced eye-watering tariffs on dozens of countries and trading blocs around the world. The tariffs amount to the largest tax hike on Americans since 1968, according to J.P. Morgan, and they have triggered a meltdown in global markets.
Those tariffs would have been bad enough. But early Thursday morning, the oil cartel OPEC+ announced that it would boost oil production by 411,000 barrels a day next month — far more than expected — which will essentially compress three months of supply increases into one.
This is bad news for U.S. producers, who compete with OPEC’s oil on global markets. But what’s astonishing is that Trump had been the leading voice calling for OPEC+ to boost its supply. Since January, Trump has hectored the cartel to “bring down the price of oil” in order to ease inflation and end the Ukraine war. Now they’re doing so, and it could not come at a worse possible time for the American oil and gas industry.
Since Wednesday, the West Texas crude oil benchmark has fallen by roughly 14%. A barrel of oil now trades at about $62. That is well below the $65 level that oil producers need in order to turn a profit drilling new wells nationwide, according to the most recent Dallas Fed survey of energy companies. It’s so low that it could essentially prohibit any new drilling activity in the United States for the time being.
These two policies have essentially frozen the U.S. oil industry for now, according to Rory Johnston, a longtime oil analyst and the author of the Commodity Context newsletter.
“You’re probably seeing more pauses of initial investment intention than the initial Covid shock. It’s really bamboozling,” Johnston told me. “Everything else is really, really starting to grind to a halt, and you’re not seeing anyone jumping over themselves to ‘drill, baby, drill,’ despite the White House’s claims.”
The week has seen brutal sell-offs for major oil companies and the smaller independents. As of Friday afternoon, shares of Diamondback Energy, a Texas-based oil exploration firm, had lost 20% of their value since Monday. The Dallas-based Matador Resources lost 22% in the same time. The oilfield services giant Halliburton is down 20% on the week and 50% in the past 12 months. Nabors, another oilfield service provider, is down 30% in just the past five days.
The traditional major oil companies have held up only somewhat better. Exxon’s shares are down more than 10%, bleeding at least $55 billion in market value, since the president’s tariff announcement. Occidental Petroleum is down 15% on the week while Chevron is down 13%.
At current prices, new oil drilling could even shut down in the Permian Basin near Midland, Texas — the cheapest part of the country to extract. Oil companies need crude to trade above $61 in order to turn a profit drilling there, according to the Fed survey.
Natural gas prices have also fallen. The benchmark for U.S. gas prices, called Henry Hub, has lost 6% so far in trading on Friday.
Why? There are a few big drivers. Although oil and natural gas imports are technically exempt from President Trump’s most recent tariffs, they haven’t been spared from the macroeconomic fallout. If the tariffs lead to a global downturn, which J.P. Morgan analysts now believe is more likely than not, then oil demand will fall.
Worse for the industry is that Trump’s tariffs are hitting the parts of the world where oil demand is projected to grow in the near term. He has slammed six Southeast Asian countries with very high levies, including a 46% tariff on Vietnam and a blistering 49% tariff on Cambodia.
Those tariffs could slow or reverse those economies’ growth, dinging their hunger for oil. As of last year, Southeast Asia was projected to make up more than 25% of energy demand growth over the next decade, with oil demand alone projected to grow by 28%.
“The macro concern is that if these tariffs stay where they are, this is in a global recession, if not a depression-making place,” Johnson added. “And given that the highest tariff rates are on Asia in particular, and that’s where all growing oil demand is, it’s not good for oil.”
And that’s not all. The tariffs mean that the American oil industry is already paying higher costs for key industrial inputs needed to drill more wells. Drilling for oil and gas takes plenty of physical equipment — steel pipe, motors, condensers, valves, and more — and a large share of those goods come from overseas. Since Trump imposed a 25% tariff on steel and aluminum last month, drillers have watched the price of tubular steel pipe rise by roughly 30%, Johnston said.
“I think the tariffs have this demand hit, but there’s also this supply challenge. Particularly here in the U.S., the cost of doing anything or getting more investment is just skyrocketing,” Rachel Ziemba, a macroeconomic analyst and an adjunct senior fellow at the Center for a New American Security, told me.
“From a U.S. production standpoint, there’s this view that we weren’t going to see the same additional supplies out of the U.S. that President Trump and his team have been hoping for,” she said.
These three factors explain much of the current pandemonium. But Trump’s trade policies are also wreaking havoc in oil markets simply by making the global economy weaker. By slowing global trade, Trump will reduce demand for oil — regardless of any other effect that the tariffs might have.
“Oil is so integral to the global economy. You can try to carve oil out, and you can try to carve direct inputs for production out, but if you have these other tariffs that impact trade flows — well, trade means oil. You’re gonna impact shipping — that’s oil as well,” Arnab Datta, the managing director of policy implementation at Employ America, a nonpartisan think tank, told me.
The natural gas industry could also eventually pay for the tariff chaos. The countries and trading blocs most likely to import liquified natural gas — including the European Union, China, and the Southeast Asian countries — have also been hit hardest by the president’s trade levies. Natural gas companies have yet to announce a single new supply contract so far this year, Ziemba said.
It’s possible that the president eventually tries to secure a long-term LNG purchase agreement with countries as a way to wind down the tariffs, she added. During the first Trump administration, China agreed to buy a fixed amount of soybeans from the United States, although it ultimately made none of the promised $200 billion in export purchases.
So far, oil executives have praised the president or stayed silent, even as their shares have collapsed. But when given an opportunity to speak anonymously, they have slammed the administration’s policies.
“The administration's chaos is a disaster for the commodity markets. ‘Drill, baby, drill’ is nothing short of a myth and populist rallying cry. Tariff policy is impossible for us to predict and doesn't have a clear goal,” one executive told the Dallas Fed last month, before the most recent round of trade levies were announced. “I have never felt more uncertainty about our business in my entire 40-plus-year career,” said another.
One struggle for the fossil fuel industry — and for the broader market — is that the federal government has now lost credibility with global investors that it won’t pursue a reckless tariff policy in the future, Datta added.
“There’s no confidence they won’t change again,” he said. “How do we get out of this chaotic environment? I don’t think we can.”
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On China’s carbon goal, a U.S. uranium ramp up, and Microsoft’s green steel deal
Current conditions: Tropical Storm Humberto formed in the Atlantic and is expected to strengthen into a hurricane this weekend, bringing rip currents to Bermuda, the Bahamas, and the U.S. East Coast • Severe storms could bring winds of up to 75 miles per hours throughout the Mid-Atlantic region • As its death toll climbs to 25 in Taiwan and the Philippines, Typhoon Ragasa is weakening as it moves toward Southeast Asia.
The Trump administration is stepping up its efforts to crack down on states’ policies to curb climate-changing pollution, asking the public to submit examples of laws with “significant adverse effects” on the economy. So far, E&E News reported Thursday, 251 respondents have given the Justice Department potential targets, including bans on fossil fuel appliances in new buildings and policies to bar the use of so-called forever chemicals in states such as Maine, New Mexico, and Minnesota.
The Department of Justice first posted a call for comments in the Federal Register in August to find state climate policies that are “burdening” energy development. Already, the administration has filed lawsuits against Vermont and New York to challenge their climate Superfund laws, and sued Hawaii and Michigan to thwart those states’ plans to sue fossil fuel companies over the effects of global warming. This month, the administration urged the Supreme Court to side with industry and transfer climate lawsuits from state to federal courts.
Chinese President Xi Jinping. Suo Takekuma - Pool/Getty Images
When President Donald Trump shredded the United States’ climate goals and started the process to withdraw from the Paris climate accords on his first day in office, campaigners hoped China and the European Union would pursue more ambitious carbon-cutting targets to make up the difference. But that’s not what’s happening. On Wednesday, Chinese President Xi Jinping announced plans to cut emissions by just 7% to 10% by 2035. The European Union complained that Beijing’s new goal “falls well short.” But, as I reported in this newsletter, the EU failed to muster support across the bloc for its own new binding carbon targets ahead of the United Nations General Assembly this week.
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Centrus, the American uranium enrichment giant spun out from the federal government in 1998, announced on Thursday an expansion of its Piketon, Ohio, nuclear fuel facility. The new production line is expected to add 300 jobs at the plant and bolster output of both the low-enriched uranium used in traditional reactors and the High-Assay Low-Enriched Uranium, or HALEU, needed for many of the new next-generation small modular reactors under development. While the company said the size and scope of the expansion depend on federal funding decisions from the Department of Energy, the plans “would represent a multibillion-dollar private and public investment.” After decades of decline, the surge in electricity growth has spurred newfound interest in atomic energy. As Heatmap’s Katie Brigham wrote last month, “the nuclear power dealmaking boom is real.”
“The time has come to restore America’s ability to enrich uranium at scale,” Centrus CEO Amir Vexler said in a statement. “We are planning a historic, multi-billion-dollar investment right here in Ohio — supported by a nationwide supply chain to do just that. When it comes to powering our energy future, it’s time to stop relying on foreign, state-owned corporations and start investing in American technology, built by American workers.”
Microsoft this week inked a deal to buy green steel from a first-of-a-kind facility in northern Sweden, Canary Media’s Maria Gallucci reported Thursday. While the tech giant doesn’t directly buy construction materials itself for its data centers, Microsoft agreed to work with its equipment suppliers to ensure that Stegra’s green steel is used in some of its server farms in Europe. As part of the deal, Microsoft will also buy “environmental attribute certificates” that represent the emissions reductions provided by Stegra’s steel and allow the steelmaker to sell its “near-zero emission” metal into the European market at a significant markdown, putting the more expensive green steel in line with the prices of fossil-fueled steel. Efforts to green the U.S. steel industry have stalled out since Trump returned to office. But the White House’s decision to claim a “golden share” of steelmaker U.S. Steel as part of its approval of Japanese rival Nippon Steel’s takeover earlier this year could, as Heatmap’s Matthew Zeitlin wrote this summer, give a future administration the leverage to push greening the supply in the future.
The National Association for the Advancement of Colored People came out against a proposal for a 4.5 million-square-foot data center campus in Bessemer, Alabama, on the grounds that the 70% Black city is already home to major emitters of greenhouse gases and an energy-hungry server farm would make that worse. In an open letter cited in Inside Climate News on Thursday, the state chapter of the NAACP said “the impacts of the data center do not justify its construction.” Residents “are fighting for cleaner air as these plants contribute significantly to the current climate crisis and health issues in the county.” It’s part of a mounting backlash to the growth of data centers. Earlier this month, a Heatmap Pro survey found that only 44% of Americans would welcome a data center in their neighborhood, making them significantly less popular than even a gas-fired power station.
A new analysis of a million-year-old human skull discovered in China could radically upend the scientific consensus on the origins of Homo sapiens, raising the possibility that our species developed in Asia rather than Africa. “This changes a lot of thinking because it suggests that by one million years ago our ancestors had already split into distinct groups, pointing to a much earlier and more complex human evolutionary split than previously believed,” Chris Stringer, an anthropologist and research leader in human evolution at the Natural History Museum in London, told The Guardian. “It more or less doubles the time of origin of Homo sapiens.”
In a special episode of Shift Key, Rob interviews Representative Sean Casten about his new energy price bill, plus Emerald AI’s Arushi Sharma Frank.
Artificial intelligence is helping to drive up electricity demand in America. Energy costs are rising, and utilities are struggling to adjust. How should policymakers — and companies — respond to this moment?
On this special episode of Shift Key, recorded live at Heatmap House during New York Climate Week, Rob leads a conversation about some potential paths forward. He’s joined first by Representative Sean Casten, the coauthor of a new Democratic bill seeking to lower electricity costs for consumers. How should the grid change for this new moment, and what can Democrats do to become the party of cheap energy?
Then he’s joined by Arushi Sharma Frank, an adviser to Emerald AI, an Nvidia-seeded startup that helps data centers flexibly adjust their power consumption to better serve the grid. Sharma Frank has worked for utilities and tech companies — she helped stand up Tesla’s energy business in Texas — and she discusses what utilities, tech companies, and startups can learn from each other?
Congressman Casten represents Illinois’s 6th congressional district in the U.S. House of Representatives. He is a former clean energy entrepreneur and CEO, and he sits on the House Financial Services Committee and the Joint Economic Committee. He is also vice chair of the House Sustainable Energy and Environment Coalition.
Arushi Sharma Frank is an adviser to She has previously worked in roles at Tesla, Exelon Constellation, the Electric Power Supply Association, and the American Gas Association. She is a non-resident expert at the Center for Strategic and International Studies, a nonpartisan think tank in Washington, D.C.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap, and Jesse Jenkins, a professor of energy systems engineering at Princeton University. Jesse is off this week.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Here is an excerpt from our conversation:
Robinson Meyer: Earlier you said something that I want to go back to, which was that our energy system doesn’t reward cheap energy, and it hasn’t been set up to reward cheap energy. What did you mean by that?
Representative Sean Casten: So at a high level, no market, left to its own devices, will reward cheap things. Because if I’m a buyer, I want to buy things for cheap. If you’re a seller, you want to sell things for a lot of money. I remember my dad, when I was a kid, had a little paperweight on his desk. It was an oil barrel, and on one side it said, “Relax, the price will go down,” and on the other side it said, “Relax, the price will go up.” And depending on which side of a negotiation you were on, that was how you pointed the oil barrel.
What’s happened in the energy sector that has made that hard is that, because it is such a highly regulated sector, we’ve vastly over-advantaged the producers in what would otherwise be an even negotiation. So, for example, if you as a consumer want to put a solar panel on the roof of your house, you have to get permission from your local utility, who’s going to lose the revenue, who can raise all sorts of technical objections and do that.
If you have a solar panel and you say, boy, there’s hours when I’m making more power than I want, or than I need, maybe my neighbor would like to have some of my excess — well, you’re not a regular utility. You’re not allowed to do that. Your neighbor can’t buy it from you. These are because of laws we’ve set up that says only that utility has the right to do it.
Outside of the electric space, there’s a law that’s been on the book since 1935, the Natural Gas Act, that says that you cannot build a gas export facilities in the United States unless it is in the national interest. Is it in the national interest to raise people’s price of gas? That was never specified in the act. And so when the Trump administration went through and approved all those assets — which by the way, the Biden administration had shut down in part because they said it’s in the national interest — they said, well, we think it’s in the national interest to look out for our gas producers.
Somewhat more recently than that, when the price of oil collapsed during COVID in April of 2020, Trump called the Saudis and said, we are going to withhold military aid from Saudi Arabia unless you raise the price of oil. The Saudis flinched and the price of oil went up, and he was praised on the cover of all the business magazines as saving our oil industry.
Why didn’t we do the same thing two years later when everybody was complaining about the price of oil being so high and we had a Democrat in the White House? We’ve always had this feeling, like, I need to look out for producers, because the producers have had more political clout. We’ve connected those things together, and you can be angry about that. You can be embarrassed about that. Or you can see it as an unbelievable opportunity to generate a tremendous amount of wealth to lower energy costs — and oh, by the way, cut a bunch of CO2 emissions.
Mentioned:
Democrats Bid to Become the Party of Cheap Energy
Heatmap’s Katie Brigham on Emerald AI, a.k.a. The Software That Could Save the Grid
This episode of Shift Key is sponsored by ...
Salesforce, presenting sponsor of Heatmap House at New York Climate Week 2025.
The failure of the once-promising sodium-ion manufacturer caused a chill among industry observers. But its problems may have been more its own.
When the promising and well funded sodium-ion battery company Natron Energy announced that it was shutting down operations a few weeks ago, early post-mortems pinned its failure on the challenge of finding a viable market for this alternate battery chemistry. Some went so far as to foreclose on the possibility of manufacturing batteries in the U.S. for the time being.
But that’s not the takeaway for many industry insiders — including some who are skeptical of sodium-ion’s market potential. Adrian Yao, for instance, is the founder of the lithium-ion battery company EnPower and current PhD student in materials science and engineering at Stanford. He authored a paper earlier this year outlining the many unresolved hurdles these batteries must clear to compete with lithium-iron-phosphate batteries, also known as LFP. A cheaper, more efficient variant on the standard lithium-ion chemistry, LFP has started to overtake the dominant lithium-ion chemistry in the electric vehicle sector, and is now the dominant technology for energy storage systems.
But, he told me, “Don’t let this headline conclude that battery manufacturing in the United States will never work, or that sodium-ion itself is uncompetitive. I think both those statements are naive and lack technological nuance.”
Opinions differ on the primary advantages of sodium-ion compared to lithium-ion, but one frequently cited benefit is the potential to build a U.S.-based supply chain. Sodium is cheaper and more abundant than lithium, and China hasn’t yet secured dominance in this emerging market, though it has taken an early lead. Sodium-ion batteries also perform better at lower temperatures, have the potential to be less flammable, and — under the right market conditions — could eventually become more cost-effective than lithium-ion, which is subject to more price volatility because it’s expensive to extract and concentrated in just a few places.
Yao’s paper didn’t examine Natron’s specific technology, which relied on a cathode material known as “Prussian Blue Analogue,” as the material’s chemical structure resembles that of the pigment Prussian Blue. This formula enabled the company’s batteries to discharge large bursts of power extremely quickly while maintaining a long cycle life, making it promising for a niche — but crucial — domestic market: data center backup power.
Natron’s batteries were designed to bridge the brief gap between a power outage and a generator coming online. Today, that role is often served by lead-acid batteries, which are cheap but bulky, with a lower energy density and shorter cycle life than sodium-ion. Thus, Yao saw this market — though far smaller than that of grid-scale energy storage — as a “technologically pragmatic” opportunity for the company.
“It’s almost like a supercapacitor, not a battery,” one executive in the sodium-ion battery space who wished to remain anonymous told me of Natron’s battery. Supercapacitors are energy storage devices that — like Natron’s tech — can release large amounts of power practically immediately, but store far less total energy than batteries.
“The thing that has been disappointing about the whole story is that people talk about Natron and their products and their journey as if it’s relevant at all to the sodium-ion grid scale storage space,” the executive told me. The grid-scale market, they said, is where most companies are looking to deploy sodium-ion batteries today. “What happened to Natron, I think, is very specific to Natron.”
But what exactly did happen to the once-promising startup, which raised over $363 million in private investment from big name backers such as Khosla Ventures and Prelude Ventures? What we know for sure is that it ran out of money, canceling plans to build a $1.4 billion battery manufacturing facility in North Carolina. The company was waiting on certification from an independent safety body, which would have unleashed $25 million in booked orders, but was forced to fold before that approval came through.
Perhaps seeing the writing on the wall, Natron’s founder, Colin Wessells, stepped down as CEO last December and left the company altogether in June.
“I got bored,” Wessels told The Information of his initial decision to relinquish the CEO role. “I found as I was spending all my time on fundraising and stockholder and board management that it wasn’t all that much fun.”
It’s also worth noting, however, that according to publicly available data, the investor makeup of Natron appears to have changed significantly between the company’s $35 million funding round in 2020 and its subsequent $58 million raise in 2021, which could indicate qualms among early backers about the direction of the company going back years. That said, not all information about who invested and when is publicly known. I reached out to both Wessels and Natron’s PR team for comment but did not receive a reply.
The company submitted a WARN notice — a requirement from employers prior to mass layoffs or plant closures — to the Michigan Department of Labor and Economic Opportunity on August 28. It explained that while Natron had explored various funding avenues including follow-on investment from existing shareholders, a Series B equity round, and debt financing, none of these materialized, leaving the company unable “to cover the required additional working capital and operational expenses of the business.”
Yao told me that the startup could have simply been a victim of bad timing. “While in some ways I think the AI boom was perfect timing for Natron, I also think it might have been a couple years too early — not because it’s not needed, but because of bandwidth,” he explained. “My guess is that the biggest thing on hyperscalers’ minds are currently still just getting connected to the grid, keeping up with continuous improvements to power efficiency, and how to actually operate in an energy efficient manner.” Perhaps in this environment, hyperscalers simply viewed deploying new battery tech for a niche application as too risky, Yao hypothesized, though he doesn’t have personal knowledge of the company’s partnerships or commercial activity.
The sodium-ion executive also thought timing might have been part of the problem. “He had a good team, and the circumstances were just really tough because he was so early,” they said. Wessells founded Natron in 2012, based on his PhD research at Stanford. “Maybe they were too early, and five years from now would have been a better fit,” the executive said. “But, you know, who’s to say?”
The executive also considers it telling that Natron only had $25 million in contracts, calling this “a drop in the bucket” relative to the potential they see for sodium-ion technology in the grid-scale market. While Natron wasn’t chasing the big bucks associated with this larger market opportunity, other domestic sodium-based battery companies such as Inlyte Energy and Peak Energy are looking to deploy grid-scale systems, as are Chinese battery companies such as BYD and HiNa Battery.
But it’s certainly true that manufacturing this tech in the U.S. won’t be easy. While Chinese companies benefit from state support that can prop up the emergent sodium-ion storage industry whether it’s cost-competitive or not, sodium-ion storage companies in the U.S. will need to go head-to-head with LFP batteries on price if they want to gain significant market share. And while a few years ago experts were predicting a lithium shortage, these days, the price of lithium is about 90% off its record high, making it a struggle for sodium-ion systems to match the cost of lithium-ion.
Sodium-ion chemistry still offers certain advantages that could make it a good option in particular geographies, however. It performs better in low-temperature conditions, where lithium-ion suffers notable performance degradation. And — at least in Natron’s case — it offers superior thermal stability, meaning it’s less likely to catch fire.
Some even argue that sodium-ion can still be a cost-effective option once manufacturing ramps up due to the ubiquity of sodium, plus additional savings throughout the batteries’ useful life. Peak Energy, for example, expects its battery systems to be more expensive upfront but cheaper over their entire lifetime, having designed a passive cooling system that eliminates the need for traditional temperature control components such as pumps and fans.
Ultimately, though, Yao thinks U.S. companies should be considering sodium-ion as a “low-temperature, high-power counterpart” — not a replacement — for LFP batteries. That’s how the Chinese battery giants are approaching it, he said, whereas he thinks the U.S. market remains fixated on framing the two technologies as competitors.
“I think the safe assumption is that China will come to dominate sodium-ion battery production,” Yao told me. “They already are far ahead of us.” But that doesn’t mean it’s impossible to build out a domestic supply chain — or at least that it’s not worth trying. “We need to execute with technologically pragmatic solutions and target beachhead markets capable of tolerating cost premiums before we can play in the big leagues of EVs or [battery energy storage systems],” he said.
And that, he affirmed, is exactly what Natron was trying to do. RIP.