27/01/2025

BIZ & FINANCE MONDAY | JAN 27, 2025

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Trump’s oil push may hit industry roadblock

Procter & Gamble beats quarterly sales estimates NEW YORK: Procter & Gamble beat second-quarter sales estimates last week, as the Pantene shampoo maker’s efforts to bring newer versions of its products to the market across various price tiers attracted more customers in the United States. After losing some consumers due to repeated price hikes following a pandemic slump, P&G has now vowed to invest in boosting innovation and launching affordable products such Olay Melts and Tide Evo to draw in lower-income shoppers who like to shop cheaper private-label brands. The company has also tried to revamp its marketing and line-up of influencers on fast-growing Chinese shopping app Douyin in recent months, which helped its Pantene shampoo lead growth in hair care on the platform, executives said in November. It reported a 2% rise in overall organic volumes in the second quarter, while the average prices across its product categories remained flat. The company’s net sales rose to US$21.88 billion from US$21.44 billion a year earlier. Analysts had expected US$21.54 billion, according to LSEG data. – Reuters Meta denies forcing users to follow White House accounts PARIS: Social networking giant Meta has denied complaints from some users that they are being forced to follow accounts belonging to the new administration of US President Donald Trump. Accounts belonging to Trump, First Lady Melania Trump and Vice-President JD Vance “are managed by the White House so with a new administration, the content on those pages changes”, Meta spokesman Andy Stone posted on X. “People were not made to automatically follow any of the official Facebook or Instagram accounts” around the change in government, Stone added. The same process had happened during the last presidential transition in 2021, he said. “It may take some time for follow and unfollow requests to go through as these accounts change hands,” he added in response to some users’ complaints they were unable to stop following the new administration. The complaints follow sustained efforts by Meta boss Mark Zuckerberg to stay in Trump’s good graces since his November election victory. Zuckerberg, who attended Trump’s inauguration ceremony, has dined with the new president, named several of his allies to key roles and ended programmes targeted by conservatives. – AFP Asked what economic policies he hoped Trump would enact, Laffer named a wish list of measures he wanted to see. “I hope we get tariffs reduced dramatically, and non-tariff barriers reduced, and quotas reduced,“ he said. “I hope we get the Tax Cuts and Jobs Act re-upped,” he added, referring to Trump’s 2017 package of tax cuts, some of which is set to expire at the end of this year. “And I hope we get deregulation, we get cutting in government spending, and we go to a supply-side economy where we have a low rate broad-based flat tax, spending restraint, sound money, minimal regulations, free trade,” he added. – AFP

“(This was) more than any other country.” The US Energy Information Administration also estimates that US production will hit 13.5 million barrels a day this year, “which would imply yet another annual record”, Glickman told AFP. But analysts say the prospect of oversupply and worries about global demand currently could make US producers reluctant to step on the accelerator – to prevent crude prices from falling too much. US oil companies will likely “act in their own interest” economically, and drill when they expect it to be profitable, said Andrew Lipow, president of Lipow Oil Associates. That will depend on the price of oil, he added, alongside the return on capital. Some oil majors are already cautious about global supply. “We are seeing record levels of demand for oil, record levels for demand for products coming out of our refineries,” said ExxonMobil CEO Darren Woods on CNBC in November. “But we also see a lot of supply in the world right now,” he said, adding that much of it comes from the United States. Woods recounted how, after the merger of Exxon and Mobil in 1999, the group owned 45 refineries. But when he took the helm in 2017, it only had 22 refineries, he told CNBC.

Trump’s strategy has also puzzled analysts considering the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) has 5.8 million barrels per day of unused capacity, said Robert Yawger of Mizuho Americas. Eight members of OPEC+, including Saudi Arabia and Russia, have planned to gradually reverse production cuts of 2.2 million barrels per day since last year. The new US administration “has to justify increases in production by the bottom line. It has to be cost-effective”, said Yawger. “They’re not going to repeat the problem that we’ve done in the past, and that’s just oversupply the market and kill the golden goose.” The emergence of shale oil and gas at the turn of the 2010s disrupted the US oil industry. Concerned about the rise of the United States, Saudi Arabia decided to retaliate by flooding the oil market, causing the price of a barrel of West Texas Intermediate (WTI), the American benchmark, to fall to US$26 in 2016. A part of the shale oil industry shuttered, and surviving players vowed to manage their growth and finances more effectively. “Misguided, irrational energy policies are done,” said Jeff Eshelman, president of the Independent Petroleum Association of America, said in response to Trump’s announcements. “America’s vast resources will be unleashed responsibly.” – AFP

WASHINGTON: President Donald Trump wants to boost US oil production, pledging to bring costs down – but analysts warn his efforts could be hampered by the industry itself. Taking aim at an “inflation crisis” which he said was driven by rising energy prices, Trump vowed: “Today I will also declare a national energy emergency. We will drill, baby, drill.” “We will be a rich nation again. And it is that liquid gold under our feet that will help to do it,” he pledged in his inaugural address. While the United States is the world’s leading crude oil producer, the US president wants to boost oil and gas production to lower costs, fill strategic reserves and “export American energy all over the world”. In declaring a national energy emergency, Trump reversed some drilling bans, including in a protected area in Alaska. “It’s hard to reconcile the notion that we have an energy emergency, when the US produced 13.2 million barrels per day of crude oil in 2024,” said analyst Stewart Glickman of CFRA. o US producers reluctant to drill due to worries about global demand, say analysts

An oil pump jack is seen in the Loco Hills region in the US state of New Mexico. – REUTERSPIC

Tariff threats are ‘leverage‘, says American economist WASHINGTON: Donald Trump’s recent threat to impose 25% tariffs on Canada and Mexico are a negotiating tactic, the president’s long-time informal economic adviser argued. convinced that you will put those tariffs on,” he added. Trump’s comments drew condemnation from Beijing and Ottawa, while Mexico’s President Claudia Sheinbaum said it was important to “keep a cool head and refer to signed agreements, beyond actual speeches”.

Shortly after taking the oath of office last Monday, Trump said he was mulling new tariffs of 25% against the two close US allies starting Feb 1, accusing them of failing to tackle illegal immigration and drug trafficking. “I think President Trump believes that they could easily solve the immigration problem for the US, and they could make a big dent in the fentanyl problem,” Laffer said. Trump also threatened to impose a 10% tariff on China which, he said, had not done enough to tackle the flow of the synthetic opioid to Canada and Mexico, from where it is trafficked into the United States.

“Donald Trump is doing exactly what any rational person would do understanding economics,” Arthur Laffer, one of the godfathers of supply-side economics, told AFP in an interview. “He’s using trade as a tool to exact other policies. It’s his leverage,” said Laffer, 84, who was an economic adviser to President Ronald Reagan and has long informally advised Trump, but is not part of his administration. “In order for that leverage to be true, in order for that leverage to really work, you have to be

Trump’s tariff and immigration proposals – which include the mass deportation of millions of undocumented workers – have been criticised as inflationary by many economists, who see these policies putting pressure on the Fed to pause interest rate cuts. Supporters such as Laffer and Treasury secretary nominee Scott Bessent have asserted the president’s planned supply-side tax and deregulation reforms should help counteract any temporary inflationary pressures from tariffs.