Dan Eberhart believes in President Trump’s agenda and its potential for economic growth, despite the tariffs and other polices that have proved to be a “hard pill” to swallow for some of his customers in the oil and natural gas industry.
Eberhart is the CEO of Canary, one of the nation’s largest privately-owned oil services firms. He is also an adamant supporter of the Republican Party, a Trump donor, and an active follower of the midterm fights for the House and Senate.
Eberhart sat down with the Washington Examiner’s John Siciliano for an exclusive interview to discuss some of the challenges in the energy industry, Trump’s trade policy and deregulation agenda, and the upcoming midterm elections.
He has been making the rounds lately in Washington, meeting with Cabinet members and senior White House officials. John caught up with him right after he sat down with Mick Mulvaney, Trump’s budget chief.
Eberhart was optimistic.
Washington Examiner: The Energy Information Administration recently put out its preliminary finding that the U.S. has surpassed Saudi Arabia and Russia to become the world’s largest oil producer. What implications does that have for both the industry and the Trump agenda?
Eberhart: I think we have been creeping up there, and Saudi Russia, and the U.S., are all around the same production numbers, roughly.
But I think it speaks to the long-term success of U.S. shale. I think the increase in U.S. production is what gives us the ability, for instance, to put sanctions on Iran, or to have a more robust foreign policy and worry a little bit less about production. I also believe that the ability to export oil has been a resounding success for the U.S. industry, and gives us more economic gains from trading oil worldwide.
Washington Examiner: I know you’ve been involved in discussions with the administration on the Trump trade agenda. From your point of view, how are things going on that front?
Eberhart: I have been a little bit on both sides of the fence on trade. I think the steel and aluminum tariffs are a negative for my industry and for consumers in the short term. But I think Trump is absolutely right that these other countries, particularly China, are taking advantage of us, and the past two administrations, Obama and Bush, lacked the stomach and the intestinal fortitude to punch back and try to get us a better deal. So, I applaud Trump for that.
As far as my business, a 25 percent tariff is a 28 or 29 percent increase in cost to us. Whenever everything is factored in, we’ve got to raise prices on our customers, 7, 8, 9 percent. Our customers don’t want to hear that and it’s a difficult pill to swallow.
So, I think in a small way it hurts U.S. shale relative to our competing with OPEC.
Washington Examiner: Is the Trump administration open to hear some of your concerns? I mean you’re saying it’s a hard pill to swallow, are they hearing that?
Eberhart: I think they do hear that, and I was with Mick Mulvaney this morning and he definitely indicated that they’ve heard that and understood that.
I think the administration’s response is, ‘look, we’re all adults here. We’ve got to be tough through this … and rush through the tornado, or through the hurricane, because the other side is going to be better, and we’re going to get concessions that are going to be better for us in the long term.’
So, their message is ‘hold on, we can get through this,’ and in the medium term and in the long term, this is going to have more economic gains and more economic benefits for Americans.
Washington Examiner: What else is Mulvaney saying? Is there anything else you took away from meeting with him?
Eberhart: Sure. I think he is focused on the budget and focused on trying to put Trump’s policies in place. He’s a bit frustrated that Congress doesn’t show more spending restraint. I think he’s also a bit frustrated that he feels the media is not getting Trump’s message out; the economic satisfaction score being at an all-time high, people having confidence to quit their jobs, which is in a lot of ways better than even lower unemployment. It shows that people have places to go and ways to improve themselves.
And then the unemployment number. He’s frustrated that the administration has not been as successful as they would hope in getting that message out and getting the data in front of the American voters before the mid-terms.
Washington Examiner: Is there anything specific to energy that [Mulvaney] focused on? He is focused on deregulation. Is there something to take away from that side of the argument?
Eberhart: He thinks that the deregulation that’s happened under the Trump administration has had more of an impact than the tax cuts or any other legislation they’ve passed in the administration.
I’ll also add, a few weeks ago I was with Rick Perry. And he was really talking about how the administration is focused on reducing the red tape on the pipeline infrastructure problem.
We’ve got a pipeline deficit in West Texas in the Permian Basin. And then we also have a coming shortage of export terminals to export crude. And I think the administration is focused on reducing red tape and trying to move those projects along as quickly as feasible.
Washington Examiner: Could you elaborate on the coming oil export terminal shortage?
Eberhart: Sure. From 2015 we’ve gone from zero to 2.2-2.5 million barrels a day being exported. The thought process is somewhere in the 2.7 to 3 [million barrels per day range], we’re going to hit an infrastructure deficit, or a problem with the amount we can export. So, that’s going to limit the growth in the oil exports probably starting some time next summer, depending on the price.
So, the thought process is ‘we really need to get a lot more capacity,’ so that does not limit our ability to grow that source of income for U.S. companies.
Washington Examiner: Is that a concern for what you do, and your company?
Eberhart: It is in the medium term. A more pressing concern is really the lack of pipeline infrastructure in the Permian, [which] is really impacting growth for the industry. We’ve heard from a lot of companies that would like to add [drilling] rigs, and the problem is really that bottleneck and the takeaway capacity.
The companies that have committed to space and transmission lines are okay, but a lot of companies didn’t commit enough and wish they would have now.
These projects are timely, they are expensive, and they have a tendency to get delayed, or pushed back a little bit here, a little bit there for various reasons. And the industry really needs them now. So, that’s a big problem for us growing into the Permian, in general, and continuing to grow.
Washington Examiner: Do you have any thoughts on the new EPA proposal to roll back Obama-era rules for capturing methane at natural gas wells? What are your thoughts on the whole methane issue, and rolling back the Obama agenda on that?
Eberhart: It’s something serious that needs to be looked at very carefully. I think the Obama regulations are a little bit onerous. I know in western North Dakota, there is definitely a pipeline deficit in the gathering systems, and it takes time, it takes money, and it takes energy to solve that. And I don’t think you should cripple the entire industry with the methane rules implemented by the Obama administration, [which] are really counter intuitive.
The industry doesn’t want to flare the gas either. The industry wants to capture the gas for the revenue, but the infrastructure takes time. In places like the Bakken [shale oil region] the infrastructure just hasn’t got there yet.
Washington Examiner: Moving to the midterms. There is talk of both a ‘blue wave’ and a ‘red wave.’ Where are you on that?
Eberhart: I think we are actually headed for a green wave. I think the Republicans are going to beat the spread and do better than expected. Because I think that the economy is doing well and the people are going to vote their pocket book and their economic satisfaction, and the consumer sentiment index. And more of the reporters should be looking at that kind of data.
But my sense is that the Republicans do lose a few seats in the House but pick up a few seats in the Senate. I think it’s going to be a more mixed message than a complete ‘blue wave,’ and I think the economy is going to lead the Republicans to doing incrementally better, at least beating the spread, from what the media seems to think.
Washington Examiner: Has the administration expressed to you their strategy on the possibility of the Democrats taking back the majority?
Eberhart: I don’t think there has been a whole lot of planning on that. There’s not a lot of serious people who think that the Democrats are going to get the Senate.
More of the planning is on potential strategies surrounding impeachment, and those kind of things.
Washington Examiner: Could you elaborate?
Eberhart: Sure. First off, I think the White House is more organized, and more steady, and there’s more planning that goes on than the media gives them credit for.
My sense from working with the administration and meeting with administration officials, as I did this morning, and over the weekend, and other times, is that the administration is really a lot more thoughtful, and has really thought through many of these different scenarios a lot more than the media gives them credit for.
Just because the media doesn’t have their plan, doesn’t mean there isn’t a Trump plan for how to deal with and roll through these kind of things. There are a lot of serious people at the White House that have thought through and around, and under and over various scenarios.
