TheChek News Flow

Under-investment in the grid, natural gas shortages and ban on dirty fuel lead to energy supply crunch

Iran has started implementing rolling power blackouts across the country as the Islamic republic struggles with a shortage of natural gas ahead of winter.

Two-hour daily outages will be enforced in Tehran, the capital city that is home to 9.5mn people, from Monday and will affect homes and businesses, local media reported. Several provinces were also hit by the power cuts on Sunday.

Iran is suffering from an energy supply crunch despite having the world’s third-largest oil reserves and second largest natural gas reserves. Years of under-investment in electricity generation and poor maintenance of existing infrastructure have resulted in recurrent power blackouts during summer, when hotter temperatures led to a surge in the use of air conditioning. 

The power cuts also follow a decision to ban mazut, a high-polluting fuel oil, at three power plants in Arak, Isfahan and Karaj. The alternative to natural gas has contributed to high levels of air pollution in Iran. 

“By halting the burning of mazut at three thermal plants, the government is bound to implement scheduled blackouts across the country,” said Shina Ansari, vice-president and head of the environment department. “This is a valuable step towards reducing the health risks associated with air pollution.”

As temperatures drop in winter, Iran’s supply of natural gas is insufficient to meet surging demand, so its power plants are forced to rely on mazut as feedstock. Experts estimate that the country will face a natural gas shortfall of at least 260mn cubic metres a day this winter. It is in talks to increase imports from neighbouring Turkmenistan.

Iran’s energy crisis is exacerbated by sanctions on its nuclear programme. Since taking office in July, President Masoud Pezeshkian has left the door open to talks with the US and other western countries with the hope of securing some sanctions relief.

After Donald Trump won a second term as president this week, Pezeshkian said “it will make no difference” who will lead the US, arguing that Iran “will not apply a limited view to the development of relations with other states”. In his first term, Trump withdrew the US from Iran’s 2015 nuclear deal with world powers and reinstated sanctions as part of his “maximum pressure” campaign against Tehran.

Sanctions impede Iran from building new power plants or optimising grid operations. Industry experts say some power stations need to be overhauled or replaced.

Ahmad Moradi, a member of the parliament’s energy committee, said on Sunday that the national grid had a shortfall of 20,000MW of electricity, which he blamed on “insufficient generation capacity, problems at power stations and ageing transmission lines”. 

The Islamic republic is also seeking to manage high demand for petrol, which is blamed on fuel inefficient domestic cars, substandard fuel quality and inadequate public transport, amid limited refining capacity for the motor fuel.

Iran has one of the world’s cheapest petrol prices at about $0.02 a litre. Pezeshkian has questioned the viability of huge subsidies on petrol, fuelling speculation of a rise in prices next year.

LVMH is going through a tough transition phase. Not only is the French luxury giant facing the worst downturn in decades, it’s parted ways with roughly half of its executive committee since the beginning of the year. This week, another head rolled: that of Chantal Gaemperle, LVMH’s powerful head of human resources and synergies and one of the closest lieutenants of controlling shareholder and CEO Bernard Arnault. Gaemperle was abruptly dismissed, along with Alessia Gargano, HR chief of the group’s beauty division.

What’s going on? Arnault, who has a reputation for staying cool and calculating, has been making mistake after mistake. “Arnault has been making some really strange decisions recently,” one former close associate said, citing as an example the recent flurry of management changes at the group.

It looks as though the 75-year-old luxury king is no longer as well advised as he was before – when all his trusted captains were standing by his side. In the past year, he has let got go of many key individuals as part of his grand plan to rejuvenate the group’s leadership. That process happened quite quickly, perhaps more than would have been reasonable. Identifying young leaders of the same caliber and with the same deep understanding of the luxury sector to replace the veterans Arnault recently pushed out is proving more difficult than he perhaps initially expected.

The list of blunders Arnault has made recently is getting long and risks damaging LVMH’s reputation and ability to attract young talents, sources say, citing concerns expressed by senior leaders at the group. In September, French media outlet La Lettre published a copy of an email Arnault sent to staff in January banning them from talking to journalists from independent media such as La Lettre, Miss Tweed and other ad-free publications such as Le Canard enchaîné and Médiapart. That ban backfired and portrayed Arnault as an opponent of freedom of the press, one of the pillars of our democracy. It also exposed his drive to control the largest number of media possible. His empire already includes Les Echos, Le Parisien and the recently acquired Paris Match.

Such attitude towards the media is revealing of Arnault’s authoritarian streak and makes him look like he does not want anyone to write about the group’s harsh corporate culture and management upheavals happening within his group. There is a fine balance between being loyal to your company and keeping its strategic secrets to yourself and fulfilling your basic human need to share your experience with others, particularly when you’ve been mistreated. Richemont and Chanel share with LVMH the same secrecy-at-all-cost kind of internal policy.

LVMH likes to portray itself as a well-wishing group but the reality is that the mentality is very top-down. Arnault does not welcome feedback or criticism and allows senior managers to humiliate and mistreat others. LVMH is the industry leader and best-in-class in many aspects of the luxury business such as retail, advertising and customer service. But its performance would be even stronger if there was more of a team spirit – like in the French Navy – and staff trusted one another without having to worry about being potentially backstabbed. Admiral Loïc Finaz, former head of France’s War School and captain of a nuclear submarine, explained how the naval crew spirit can help reform the luxury industry in the book La liberté du commandement, L'esprit d’équipage, which he presented at Miss Tweed’s Luxury at the Summit in April 2023. (Link to see his conference)

La Lettre and Miss Tweed both reported on Thursday that Gaemperle was fired. Gargano was dismissed without any justification and asked to leave the building on Tuesday while Gaemperle was ousted on Nov. 1, several sources said.

Both were escorted to the door by security guards. Such brutal methods shed light on the ruthless corporate culture that has taken hold at LVMH. “It’s the LVMH method,” one source close to the group said. “Security guards force you to take your things and leave the building immediately.”

Parting ways with Gaemperle was not an easy decision for Arnault. The 62-year-old Swiss national was his confidant and served him in a very loyal fashion for 17 years. She was the mastermind behind his plan to rejuvenate the group’s top leadership. She had also done a lot of work to promote craftsmanship and develop training programs for artisans.

“They have a very close, almost symbiotic relationship which few people at the group understand,” one source close to LVMH told Miss Tweed a few months ago about Gaemperle and Arnault. “Sometimes it looks as if Arnault is under her spell, he trusts her judgment more than that of anybody else.”

However, Gaemperle’s exacting demands and management methods were increasingly frowned upon internally, particularly by Arnault’s children. Also, the group’s HR supremo did not really see eye to eye with Stéphane Bianchi, Arnault’s new strongman and managing director of the group who replaced Toni Belloni earlier this year, industry sources say.

Bianchi and Arnault’s children also disagreed with some of Gaemperle’s nominations, such as that of Pierre-Emmanuel Angeloglou as VP of the Fashion Group, who was later appointed has as CEO of Italian fashion brand Fendi. “It’s open war between Chantal and Arnault’s children,” one source close to the group said several months ago. In July, La Lettre published a story saying that Gaemperle was losing Arnault’s support.

She was known for demanding gifts from CEOs of the group’s brands and borrowing luxury items such as jewelry pieces that she would not return. Gaemperle’s behavior was becoming increasingly embarrassing for the group and an internal inquiry was launched to gather details. “Arnault could not afford to keep Chantal,” one senior industry source said.

Officially, LVMH staff cannot accept presents from brands and people from outside of the group but this rule does not apply to gifts from brands within the French group. “At Christmas, Chantal’s office was always full of gifts from the CEOs of brands,” the former head of one of LVMH’s brands told Miss Tweedon condition of anonymity. “Some executives felt they had to do that to remain in her good books and keep their jobs.” Some sources close to LVMH said her habit of piling up presents was the excuse the group used to kick her out.

Miss Tweed has received messages from people saying they were pleased to hear she had finally been given the boot. “Many staff hated her,” one person who still works for the group said. “I think a lot of people are super happy she’s finally gone.”

It’s not yet clear who will replace Gaemperle. Arnault’s children would like an external hire to bring a fresh perspective. But there could also be some internal candidates. One of them is Olivier Sastre, who is deputy managing director at Christian Dior Couture in charge of human resources and sustainable development. “Sastre has Delphine’s complete trust,” one person close to LVMH said. “He would be a strong candidate.” But there could be others too.

Another senior person who was pushed out is Jean-Jacques Guiony, the group’s longstanding chief financial officer. Arnault started to resent Guiony’s criticism of his strategy and thought it was also time for him to leave.

At Belloni’s goodbye party last spring, Arnault publicly humiliated Guiony, saying that “at least he (Belloni) knows his numbers,” implying that Guiony did not. Many staff were shocked to hear Arnault say that. Guiony is set to be replaced by Cécile Cabanis who was Danone’s CFO.

LVMH said Cabanis had has strong experience in mergers and acquisitions. However, some people in the industry say her track record in terms of acquisitions at Danone was not particularly stellar. She will replace Guiony next year. Several people close to LVMH say that Cabanis is good friends with Xavier Niel, partner of Delphine, Arnault’s oldest child and CEO of Dior. Niel referred her to replace Guiony, several sources said.

Last week, Arnault let Stéphane Rinderknech, head of LVMH’s beauty and hospitality division, sack Gargano, HR head of the beauty division. Several people close to the group said Gargano was getting complaints from employees that made Rinderknech look bad. One of them was that Rinderknech treated staff with disrespect and had a habit of promising people jobs they would never get – even after moving with their family to the city where they were supposed to work. Gargano was left with the thankless task of having to explain to them why Rinderknech had changed his mind.

As Rinderknech’s erratic management style became well documented, the executive got rid of Gargano, helped by Maud Alvarez-Pereyre, currently LVMH’s chief people and transformation officer. “That could have never happened while Chantal (Gaemperle) was still there,” one person with knowledge of the situation said. Gargano was brutally ousted from the building by Alvarez-Pereyre and given no reason for her dismissal, several sources said.

Alvarez-Pereyre is close friends with Rinderknech’s sister and was the one who suggested to Belloni that LVMH hired hire him to oversee the group’s beauty division. Rinderknech, who spent 21 years at L’Oréal, joined LVMH in 2022 to oversee the group’s hospitality division. He could not work immediately in the beauty field because of the non-competition clause in his contract with L’Oréal which lasted a year.

In 2023, Rinderknech took over the beauty division. Many people at LVMH were surprised he was hired in light of the moral and sexual harassment cases against him at L’Oréal which are public knowledge.

There have also been reports of moral and sexual harassment at Moët Hennessy, LVMH’s wines and spirits division. Bloomberg and La Lettre reported last month that Philippe Schaus, the head of the division, was leaving. LVMH denied that was the case. Up until now, it’s not clear what’s going on at Moët Hennessy and whether Schaus will leave or not.

Gaemperle and Gargano are not the only ones to have been brutally dismissed. In June, Charles-Henri Levaillant, CEO of Make Up For Ever, was also ousted without warning, several sources close to the group said. “Levaillant had complained too openly about how things were run at the beauty division,” one source close to the group told Miss Tweed after he was sacked.

Within a few days, Levaillant was swiftly shown the door, several sources said. Levaillant could not be reached for comment.

Once it’s official, Gaemperle’s departure will mark the end of an era. “For LVMH, her exit is no less than a tsunami,” one industry source said. “People did not expect it,” another one said. “It’s like there is a revolution going on inside the palace.”

Maybe Arnault needs to stop being paranoid about what journalists write about his group and just explain to staff, partners and shareholders what his plan is. Such transparency is not his style but in 2024, being too authoritarian and trying to mask things can backfire, as did his blacklisting of journalists. LVMH declined to comment for this report.

AI’s thirst for energy sealed the deal between Microsoft and Constellation on the plant, where memories of a partial meltdown in 1979 still resonate

At a small gathering for CEOs last year, OpenAI co-founder Sam Altman made a stunning pronouncement: Future data centers for some artificial-intelligence models would require as much power as a large city.

Among those taken aback in the group gathered at Microsoft’s MSFT -0.68%decrease; red down pointing triangle headquarters was Joe Dominguez, the chief executive of Constellation Energy CEG -0.92%decrease; red down pointing triangle, which produces more than a fifth of U.S. nuclear power.

“My first reaction is, ‘Wow, these guys are going to be in for a rude awakening about how much power is actually going to be available,’” he said. “It was like a lightning bolt hit me.”

Dominguez returned to Baltimore after the May 2023 meeting with an audacious idea: What if his company restarted the undamaged reactor at Three Mile Island, the site of the country’s most infamous nuclear-power accident?

Reopening an existing nuclear plant could address several problems, Dominguez thought. Tech companies need power 24/7 for AI and prefer clean-energy sources. But accessing the nation’s packed grid is difficult in many places, and the intermittence of power from new wind and solar projects makes them an imperfect solution.

What ensued was months of engineering work, including the frantic restoration of a training simulator that had been cannibalized for parts. It also involved a grueling meeting with Pennsylvania Gov. Josh Shapiro, whose support would be critical in greenlighting a politically sensitive project that had become synonymous with nuclear disasters.

Company executives used a code name for the project: Tetris, after the 1980s-era videogame in which players stack descending geometric shapes, and fast.

After 17 months, Constellation and Microsoft announced in September that the tech giant has signed a 20-year power-purchase agreement to pair its data centers with round-the-clock clean power from Three Mile Island. Constellation expects to spend around $1.6 billion on the unprecedented effort to resuscitate a reactor already undergoing decommissioning.

For Constellation, the deal could restore its relevance in an industry that had lost enthusiasm for nuclear power. Meanwhile, Microsoft may have scored an early victory in a fierce competition among tech giants to secure nuclear power to cut rising carbon emissions and power AI.

The energy puzzle

Within a few years, the most advanced AI models are projected to need five gigawatts of power, as much as five nuclear reactors, or roughly what Manhattan consumes at any given time. There is nowhere in the U.S. where it will be easy to connect data centers of that magnitude.

The prospect has caused electricity demand forecasts to skyrocket in many pockets of the country, prompting a tug of war over how to shoulder costs and concerns about whether emissions reductions targets set by tech firms and the federal government are still viable.

In Pennsylvania, Shapiro had questions. The Democratic governor had campaigned in part on accelerating the state’s clean-energy transition.

Shapiro and Dominguez met for the first time last December in Philadelphia. Dominguez, who said it was generous to describe most of his conversations with politicians as vague, didn’t know what to expect.

Shapiro, though, wanted details on the plant’s physical condition, whether the company had spoken to labor leaders, if it could find workers and equipment, and whether a restart could happen safely and without cost to Pennsylvanians.

Three Mile Island’s undamaged Unit 1 reactor sits next to Unit 2, which was shut down after a partial core meltdown in 1979. It was the biggest civilian nuclear power accident in the U.S. and became a major factor in America’s ambivalence about nuclear power. The 835-megawatt Unit 1 closed only five years ago because it had been losing money.

“He grilled me, literally grilled me for well over an hour, maybe an hour and a half,” Dominguez recalled of the governor.

At the end of the meeting, Shapiro said that if Constellation thought it could do the project, he would support it. But Constellation had to be perfect in executing it.

Shapiro spokesman Manuel Bonder said the administration has talked for a year with Constellation, legislators and stakeholders about the restart “to create thousands of good-paying union jobs and ensure the reliability of our energy grid.” Bonder noted it requires no state subsidies.

Shapiro’s support was critical. An attempt to keep Three Mile Island open in 2019 with around $500 million in state funding had failed to garner widespread support among lawmakers and business groups.

Dominguez, a former federal prosecutor and lobbyist, had worked on securing state support for it while at Exelon, the plant’s former owner. He also had tried to find tech, industrial or commercial customers who would sign agreements that could keep the plant running. It didn’t work.

Many nuclear plants in competitive power markets have been marching toward closure for years because they couldn’t compete on cost against natural gas-fired plants or renewables. Since the 1990s, 16 U.S. reactors supplying more than 11,000 MW of power have shut down, according to the Nuclear Regulatory Commission.

But in a shift, the Biden administration was beginning to see nuclear power as critical in achieving its goal of decarbonizing the U.S. grid by 2035. Around the country, some coal-and gas-fired power plants were retiring more quickly than they could be replaced by wind and solar farms paired with battery storage, increasing the risk of supply shortages.

The Inflation Reduction Act, the sweeping climate bill passed in late 2022, included tax credits to support nuclear energy.

After the Microsoft meeting, Dominguez directed dozens of employees to compile a status update on new energy projects that produced the zero- or low-carbon electricity tech companies needed around the clock.

Employees analyzed plans for solar and battery projects, carbon capture and storage technology, and small modular nuclear reactors. Nothing was fast or cheap, which meant Three Mile Island’s undamaged reactor might be a moneymaker again.

Dominguez recalled telling executives, “Saddle up. I want to understand within five weeks whether we could do this.”

Constellation’s engineers determined that a restart of Three Mile Island could be done but not without challenges. The main transformer needed replacement. Because of the yearslong lead time for such switchgear, Constellation started talking to suppliers about how to jump the line.

The company moved quickly to halt the decommissioning and put a blanket prohibition on any kind of destructive work that would take components apart. Employees also started to restore a specialized training simulator. Every nuclear plant has its own; workers can’t simply be transferred from other locations.

Everybody wants some

By January 2024, Dominguez was ready to shop Three Mile Island to a few corporate clients. Competition for nuclear assets was starting to heat up. Microsoft was clear: It wanted first dibs.

Noelle Walsh, Microsoft’s corporate vice president of cloud operations and innovation, said the deal made sense because it would bring a large amount of reliable, carbon-free power to market more quickly and cheaply than other options.

“If we had walked from the deal, I’m sure somebody else would have stepped in,” Walsh said.

Though the companies haven’t released financial details, Walsh and Dominguez said price wasn’t a sticking point in negotiations. Analysts at Jefferies estimate Microsoft will pay between $110 to $115 per megawatt hour of electricity. Currently operating reactors cost far less, though estimates for new nuclear construction start around $142 per MWh, according to industry analysis and Lazard.

An array of state and federal approvals will be needed. The history of U.S. nuclear power is that things take longer and cost more than expected, a risk Constellation must manage. It says it will spend around $1.6 billion to restart the reactor. It is supposed to start delivering power in 2028 under the agreement.

Restarts are possible at sites in Iowa and in Michigan, where the federal government and the state are spending nearly $2 billion to revive Michigan’s Palisades nuclear reactor, mothballed in 2022 and targeting a restart next year.

Nuclear Regulatory Commission Chair Christopher Hanson said the task of backing out of decommissioning puts Three Mile Island in “uncharted regulatory territory,” though he is optimistic.

“There may be some unique issues, and there’s going to need to be some flexibility on both sides,” he said.

Microsoft hasn’t yet put money on the table—Constellation will have to start delivering power first—but investors are excited.

Constellation was spun out of utility Exelon in early 2022, when U.S. nuclear energy’s long-term path seemed uncertain. Since then, shares are up more than 400% and its market capitalization is nearly double that of Exelon.

“The first question that we’re getting from clients is, ‘how much more of this can you do?’” Dominguez said.

Change in leadership of the Federal Trade Commission could spark M&A in tech, healthcare and beyond

Donald Trump’s victory could prove to be just what the doctor ordered for dealmakers. That is particularly the case in sectors where consolidation has been most held back, including tech and healthcare. But much remains to be seen—especially considering some of the populist forces that helped propel the 45th President to another term.

Wall Street’s dealmakers are already sharpening their pencils. Investment banking titans Goldman Sachs, Morgan Stanley and JPMorgan Chase saw their stocks notch their biggest single-day gains in four years the day after the election. Megacap tech companies have also rallied—adding $773 billion to their collective market cap this week—while biotech stocks have jumped. One big reason for the optimism is the belief that the incoming administration will prove much more friendly to major mergers and acquisition transactions that have been increasingly off the table for these industries over the past four years.

Few figures in the Biden administration have clashed more with American corporations than Lina Khan, the 35-year-old chair of the Federal Trade Commission. Khan has been a vocal opponent of tech giants, challenging companies like Microsoft MSFT -0.68%decrease; red down pointing triangle, Google, Amazon AMZN -0.89%decrease; red down pointing triangle and Meta Platforms META -0.40%decrease; red down pointing triangle. The exit of Khan and her Justice Department counterpart, Jonathan Kanter, would signal a shift to a more relaxed antitrust stance.

While antitrust policy isn’t the only factor influencing M&A, loosening restrictions could unleash pent-up demand. The market could use the boost. Last year saw the lowest number of M&A deals targeting U.S. companies since 2015, and this year is on pace to close with an even smaller number of transactions announced, according to data from Dealogic.

Megadeals have faced a particularly high barrier—especially those by companies that regulators in the U.S. and Europe have deemed “Too Big to Deal.” Enhanced scrutiny has significantly increased the time required to close deals of this scale. It took Microsoft nearly two years to complete its $75 billion acquisition of Activision Blizzard that wrapped last year, compared with the six months required to close its next largest deal—the takeover of LinkedIn in 2016.

Such lengthy waits act as another barrier to dealmaking. Amazon gave up on buying roomba-maker iRobot IRBT 0.80%increase; green up pointing triangle earlier this year after 17 months; it took the e-commerce giant less than three months to clear its acquisition of Whole Foods in 2017—at nearly eight times the price. Adobe ADBE -1.25%decrease; red down pointing triangle likewise walked away from an effort to buy design software maker Figma late last year after 15 months. By contrast, the average time to close major U.S. tech deals from 2018 through 2020 was a little under six months, according to Dealogic.

In healthcare, a shift in antitrust policy could enable pharmaceutical companies to pursue larger biotech acquisitions or even consider megamergers between pharma giants of the kind that were once common in the industry. In recent years, smaller deals of $5 billion or less have become much more popular in healthcare, while big or even midsize acquisitions have become less frequent. Notable exceptions were Pfizer’s PFE -1.18%decrease; red down pointing triangle $43 billion buyout of Seagen and Amgen’s $27.8 billion acquisition of Horizon Therapeutics, though the FTC tried to stop the latter and might have looked more favorably on the former due to Pfizer’s positive role during the pandemic. Megadeals like Bristol Myers’ BMY -1.04%decrease; red down pointing triangle acquisition of Celgene for $74 billion in 2019 or Pfizer’s $68 billion acquisition of rival Wyeth in 2009 have been out of the question.

Health insurers might also see new opportunities. For instance, some on Wall Street expect that talks for a Humana HUM 0.13%increase; green up pointing triangle-Cigna blockbuster deal—which The Wall Street Journal reported took place last year—could be revived. Humana stock is up over 10% since Trump’s victory, also due partly to expectations of a more favorable Medicare Advantage policy.

In recent years, many in Silicon Valley and in the biotechnology industry have voiced concerns that the Biden administration’s tough antitrust stance was eroding investor confidence in their ability to realize returns on investments. Critics argue that for venture capitalists to continue funding new ventures, they need the assurance that they can eventually reward shareholders through exits, often in the form of mergers or acquisitions.

Khan and her defenders argued that they weren’t out to stop all deals, simply the ones that led to a higher concentration of market power that would eventually harm consumers. That created a bias among industry titans against large deals that could be susceptible to regulatory attention.

“Obviously, anyone who wants to speculate about these things would have to immediately consider the global regulatory environment,” Disney DIS 0.09%increase; green up pointing triangle Chief Executive Bob Iger said on an earnings call last year, when asked about the oft-circulated rumor that Apple AAPL -0.12%decrease; red down pointing triangle might seek to buy the entertainment giant.

One important cautionary note: There is no guarantee that Trump will totally dial back antitrust scrutiny. Vice President-elect JD Vance is among a group of populist Republicans who have taken a more skeptical view of corporate power. Some have referred to them as Khanservatives, a nod to Lina Khan’s populism. Another: There is no assurance that key regulators abroad, who have to approve many large-scale mergers that affect their markets, would follow a Trump administration’s lead, especially if trade relations get more contentious.

Dealmaking depends on much more than just antitrust policy. Interest rates and the availability—and valuation—of suitable targets matter just as much. But dealmakers over the past four years have also had to factor in the growing odds that the federal government will just say no. Now they at least have a chance to reset those odds.

Despite president-elect’s promises, production is unlikely to surge as Wall Street demands returns over growth

US oil executives are eagerly awaiting Donald Trump’s expected rollback of environmental regulations, but despite the president’s pledge to “drill, baby, drill”, production is unlikely to increase significantly during his second term in office. 

Trump made energy policy a pillar of his campaign, vowing to slash red tape and unshackle US oil producers to drive up production and bring down prices for consumers.

“We have more liquid gold than any country in the world — more than Saudi Arabia,” Trump said as he claimed victory early on Wednesday morning. 

The former president’s re-election is a boon for the industry, which had a tumultuous relationship with Joe Biden’s administration. It is also a big pay-off for the corporate leaders who poured money into his campaign war chest. 

“I couldn’t be more thrilled by president-elect Donald Trump’s victory,” said Continental Resources founder Harold Hamm, a Trump donor. “This is a monumental win for American energy and the future of our nation’s security.”

Jeff Miller, chief executive of Halliburton, one of the country’s biggest oilfield service companies, echoed those sentiments. “It could only be positive. In fact, I’m quite optimistic,” he said. 

On taking office next January, the industry expects Trump to slash many of the environmental rules imposed by Biden. Mike Sommers, head of the American Petroleum Institute, said there had been a “regulatory onslaught” during the past four years that would now be reversed. 

“Just the signal from the administration that they want a robust oil and gas industry in the US is going to be a major component to getting this industry the investment that it needs to continue to grow,” he said. 

Among the changes the industry expects are the abolition of rules on tailpipe emissions designed to push motorists towards electric vehicles, as well as expanded access to hydrocarbons through increased leasing in the Gulf of Mexico and on public lands, and the dilution of protections for endangered species. Trump is also predicted to end a pause on new licences for liquefied natural gas terminals.

Trump has vowed to slash corporate tax and unpick Biden’s signature climate legislation, the Inflation Reduction Act. But many in the industry benefit from the IRA and are lobbying against its wholesale removal.

Trump has already begun to shape the team that will be responsible for making these changes. North Dakota governor Doug Burgum is in contention for a new “energy tsar” role that will co-ordinate the deregulatory drive across a patchwork of government agencies.

But despite the anticipated regulatory overhaul, analysts warned that a rapid increase in output during Trump’s second term was unlikely. Production has hit record levels during Biden’s term in office, reaching a fresh high of 13.4mn barrels a day in August despite the regulations. 

But investors — burnt after years of debt fuelled drilling binges — are keen for companies to prioritise returns over growth. The model of capital discipline they have imposed on the sector is unlikely to change. 

“Price and Wall Street are the regulators of US production, not the president,” said Jim Burkhard, head of research for oil markets at consultancy S&P Global. 

Production is set to average about 13.2mn barrels a day this year, according to S&P, rising to 13.6mn b/d in 2025 before probably slipping the following year, driven by lower prices. Trump’s re-election does not change its near term outlook.

Macroeconomic factors, however, may help Trump keep his promise to bring down prices at the pump: sluggish Chinese demand coupled with Opec+ plans to increase supplies are likely to depress prices in the months ahead. But that would have a negative impact on oil producers.

“The market is oversupplied because the Chinese economy is not delivering the kind of demand that it has in the past,” said Daniel Yergin, a Pulitzer Prize-winning energy historian and author of The New Map. “That is the biggest overhang for the global and US oil industry.”

Bob McNally, president of consultancy Rapidan Energy and a former energy adviser to the George W Bush administration, said that while “any president has very limited tools to impact the price of oil in the short term” if strong global supply growth outpaces demand in the coming years, Trump “may get lucky and witness a sharp decline in oil prices”.

“However, he would relearn a lesson from 2020, which is that low oil prices may please consumers, but they also hurt the US shale oil sector,” he said. “In fact the biggest threat to the US shale sector is sharply lower oil prices.”

Trump showed during his first term he was willing to play an active role in shaping the oil price. In 2018, he browbeat Opec into increasing production to bring down prices at the pump, before convincing them to slash it in 2020 to save the US shale patch from bankruptcy as prices plunged in the wake of the coronavirus pandemic. 

Trump has also vowed to exert maximum pressure on Iran, ramping up sanctions on its oil exports, which could push up the global oil price.

One of the most fundamental changes sought by the industry is for Trump, aided by Republican control of the Senate and potentially the House of Representatives, to push through far reaching permitting reform legislation after years of failed attempts. 

Alan Armstrong, head of pipeline giant Williams said he was “very hopeful with more Republican control that the permitting issue finally gets dealt with in a durable and meaningful way”.

Despite Trump’s plans to tear up environmental rules, analysts expect large public oil companies to remain motivated to curb emissions — especially when it comes to methane, a potent greenhouse gas.

“I think the expectation that they will be reducing emissions and investing in clean energy does not go away because Donald Trump was elected,” said Paul Bledsoe, a former climate adviser to the Bill Clinton administration.

“I think that’s a public expectation. That’s an investor expectation.”