Gloom in oil country

Summary

Marketplace Morning Report — "Gloom in Oil Country"

Date: September 29, 2025
Host: Sabri Benishore (in for David Brancaccio)
Length: ~10 minutes

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Episode Overview

In this episode, Marketplace Morning Report delivers a rapid-fire update on overnight developments impacting the U.S. economy, with special emphasis on the deepening pessimism among Texas oil and gas firms. Additional segments cover BP’s strategic business decisions, the bankruptcy of auto parts maker First Brands, and the USDA’s reversal on its school food sourcing program.

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Key Discussion Points & Insights

1. Gloom in Texas Oil Country

[01:06–02:55]

• Main Issue: Texas oil and gas companies are increasingly pessimistic due to weak commodity prices, rising costs (notably from tariffs), and broader geopolitical volatility.
• Economic Significance: Oil is a core component of Texas' economy, which itself makes up around 9% of the U.S. economy.
• Expert Views:
  • Kunal Patel, Dallas Fed: Highlights executives' unusual pessimism and identifies soft oil prices and market oversupply as central concerns.
  • Carr Ingham, Texas Alliance of Energy Producers: Emphasizes the direct impact of tariffs on production costs, compounding the woes caused by declining prices.
  • Dan Pickering, Pickering Energy Partners: Notes a trend toward layoffs, cost-cutting, and industry consolidation, but asserts continued resilience of Texas production.
• Notable Quotes:
  • "There's just no denying that tariffs raise costs to the oil and gas industry." — Carr Ingham [02:03]
  • "We've seen layoffs. We'll probably see some more, I would say lower activity, ongoing consolidation, because the companies are looking for ways to gain efficiency, ways to gain size and scale." — Dan Pickering [02:26]
  • "Net, net net. Texas is blessed and will continue to be." — Dan Pickering [02:43]
• Highlight: The Permian Basin, a key oil-producing region, "currently produces more oil than most countries." [02:46]

2. BP's Pivot: Big Oil Goes Bigger

[02:55–03:33]

• BP's Plan: Approving a $5 billion investment in a new deepwater platform south of New Orleans, while CEO pledges to sell $20 billion in assets—including green energy projects—to double down on oil and gas.
• Market Reaction: BP's stock prices are “about flat in premarket trading.” [02:55]
• Context: Indicates a major oil company doubling down on traditional energy amid sector-wide volatility.

3. First Brands Bankruptcy & Opaque Borrowing Risks

[03:33–04:19]

• What Happened: First Brands, known for parts like brakes and wiper blades, filed for bankruptcy after aggressive borrowing against future revenue projections.
• Underlying Issue: Relied on opaque forms of borrowing not visible on balance sheets, raising red flags about transparency and risk in corporate lending.
• Quote: "This type of opaque borrowing doesn't show up on a company's balance sheet." — Nancy Marshall Genzer [03:47]
• Investor Nervousness: Investors paused refinancing to demand independent audits.
• Takeaway: The situation spotlights the hazards of risky, under-disclosed borrowing practices in corporate America.

4. USDA Farm-to-School Program Reinstated

[05:50–09:05]

• Background: In March, the Department of Agriculture unexpectedly halted a program that allowed schools to source food from local farmers, disrupting supply chains for both districts and producers.
• Current Development: The USDA is restoring the program (now with higher funding caps and wider eligibility), starting with the new fiscal year in October.
• Farmer Perspective: Manny Encinias, cattle rancher in New Mexico, explains how the program was transformative for his business and how its abrupt cancellation inflicted financial hardship.
• Notable Quotes:
  • "I mean, the rug's been pulled out from underneath us." — Manny Encinias [07:10]
  • "It was probably going to cost us anywhere in the neighborhood of $50 to $85,000, and I think that's pretty sizable." — Manny Encinias [07:25]
  • "Two of the hardest jobs you can have in this world are like farmer and school food provider." — Sunny Baker, National Farm to School Network [07:37]
  • "I think it just left a lot of people feeling kind of burned..." — Jennifer Gaddis, University of Wisconsin [08:28]
  • "Let's just get the food back into the hands that need it." — Manny Encinias [08:47]
• Systemic Issues: School food providers are pressured by simultaneous federal budget cuts and rising costs, causing a regression to highly processed foods.
• Uncertainty Remains: Farmers and schools may hesitate to reengage, wary after the previous cancellation; worries linger about rebuilding lost trust and disrupted supply chains.

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Segment Timings

• 01:06–02:55: Texas oil industry outlook; expert commentary
• 02:55–03:33: BP's deepwater investment and asset sell-off
• 03:33–04:19: First Brands bankruptcy and lending risk
• 05:50–09:05: Farm-to-school program cancellation and reinstatement impact
  • 06:29–07:32: Farmer Manny Encinias’ experience and financial impact
  • 07:32–08:28: National Farm to School Network and academic perspective
  • 08:47–08:49: Encinias on renewed resolve to feed local kids

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Memorable Moments & Language

• The mood among oil executives stands in stark contrast to their usual optimism, emphasizing how dramatic current pressures are.
• Manny Encinias’ personal story adds a human dimension to federal policy swings, providing a sense of urgency and real-world stakes.
• The episode’s tone remains brisk but empathetic, aiming to translate economic trends into the day-to-day realities faced by workers, businesses, and families.

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Conclusion

This Marketplace Morning Report episode offers an incisive look at the somber mood in Texas’ vital oil sector, the calculated risks of corporate borrowing, and the tenuous state of programs linking local farmers to public schools. Through expert voices and grounded stories, it highlights the interconnectedness of policy decisions, market forces, and American livelihoods.

Transcript

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[Sabri Benishore]

Gloom in Oil Country From Marketplace, I'm Sabri Ben, ashore in for David Brancaccio. Texas oil and gas firms are feeling pessimistic about the upcoming year. In the latest Dallas Fed survey, energy firms reported lower production in increased costs and heightened uncertainty. Oil is, of course, a good chunk of the Texas economy, and the Texas economy is a good chunk of the U.S. economy, around 9%. Marketplace's Elizabeth Troval has more on what it all means.

[Kunal Patel]

Typically, Kunal Patel with the Dallas Fed says oil and gas executives tend to.

[Carr Ingham / Dan Pickering (Energy Experts)]

Look at the bright side, and right now they're pessimistic.

[Kunal Patel]

Some of their top concerns Commodity prices, uncertainty, geopolitics Relatively weak oil prices is the big issue with OPEC raising production in an already amply supplied market. And tariffs aren't helping, says Carr Ingham with the Texas alliance of Energy Producers.

[Carr Ingham / Dan Pickering (Energy Experts)]

There's just no denying that tariffs raise costs to the oil and gas industry. And there's no denying that that's happening in a year in which the price of the commodity that they sell is lower than it was last year.

[Kunal Patel]

The cost cutting has already begun for oil and gas firms and will likely continue, says Dan Pickering with Pickering Energy Partners.

[Carr Ingham / Dan Pickering (Energy Experts)]

We've seen layoffs. We'll probably see some more, I would say lower activity, ongoing consolidation, because the companies are looking for ways to gain efficiency, ways to gain size and scale.

[Kunal Patel]

But he's not betting against the state's oil producers either.

[Carr Ingham / Dan Pickering (Energy Experts)]

Net, net net. Texas is blessed and will continue to be.

[Kunal Patel]

The Permian Basin currently produces more oil than most countries. I'm Elizabeth Trovall for Marketplace.

[Sabri Benishore]

Speaking of oil, BP has approved a $5 billion investment in a deepwater oil platform about 300 miles south of New Orleans. BP's CEO has pledged to sell $20 billion in assets, including green energy projects, to finance the company's refocus on oil and gas. BP stock is about flat in premarket trading. The auto parts manufacturer First Brands has filed for Chapter 11 bankruptcy, got itself into this mess by borrowing too much, and the company's rapid fall has raised questions about the riskier side of lending in corporate America. Marketplace's Nancy Marshall Genzer has that First.

[Nancy Marshall Genzer]

Brands is a conglomeration of companies acquired through loans. They make brake parts, windshield wipers and water pumps. First Brands borrowed against its future revenues, promising to pay back investors when the money came in. This type of opaque borrowing doesn't show up on a company's balance sheet. First Brands tried to refinance its debt last month. The refinancing was put on pause after investors asked for an independent auditing of the company's accounts. I'm Nancy Marshall Genser for Marketplace.

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[Sabri Benishore]

Back in March. And without warning, the Department of Agriculture terminated a program that helped schools buy locally grown food for student meals. Now the department is bringing it back with revisions for next year, technically the fiscal year, which starts in October. In the past, schools used this program to get anything from local ground beef for patties to fresh veggies for salad bar. But farmers in school districts could be hesitant to participate this time around. Marketplace's Savannah Peters has more.

[Savannah Peters]

On Buffalo Creek Ranch in Moriarty, New Mexico, a couple of Angus cows and their calves are munching on hay.

[Manny Encinias]

We're 13th generation New Mexicans. We've been ranching, you know, as a business for the last five to six generations.

[Savannah Peters]

Manny Encinias and his family market their beef locally to restaurants and at farmers markets. But a few years ago, Encinias says school districts joined his customer base with funding from the usda.

[Manny Encinias]

That was a game changer, right? I think for us, that's given us market access during the fall and the.

[Savannah Peters]

Wintertime when Encinillas says direct to consumer sales tend to slow down, he gradually scaled up to supply that new market. But when the funding was canceled, so were a lot of his contracts.

[Manny Encinias]

I mean, the rug's been pulled out from underneath us.

[Savannah Peters]

Encinias had to break from his usual business model and auction off some of his cow calf pairs. That meant he got a smaller return than he was expecting through contracts with the schools.

[Manny Encinias]

It was probably going to cost us anywhere in the neighborhood of 50 to $85,000, and I think that's pretty sizable.

[Savannah Peters]

This is how a lot of small scale farmers spent their summer, looking for new buyers for food that was supposed to feed local kids. At the same time, schools scrambled to fill holes in their menus. Two of the hardest jobs you can have in this world are like farmer and school food provider. Sunny Baker with the national Farm to School Network says school districts are getting squeezed by multiple federal cuts plus higher food prices across the board. They're often going back to highly processed foods to just get the kids Simply fed. The USDA's revived Farm to school grant program comes with a higher funding cap and looser guidelines for which local producers schools can buy from. But Jennifer Gaddis, a professor at the University of Wisconsin, says it may be too late to restore some farm to school partnerships. I think it just left a lot of people feeling kind of burned that they had spent a lot of people hours trying to start something new in terms of these new relationships, these new supply chains. In New Mexico, Manny Encinias is willing to give it another go if local school districts are let's just get the.

[Manny Encinias]

Food back into the hands that need it.

[Savannah Peters]

But Encinias builds his herds and makes business plans a year or more in advance if those markets are coming back. He needed to know yesterday. In Moriarty, New Mexico, I'm Savannah Peters for Marketplace.

[Sabri Benishore]

And in New York, I'm Sabri Benishore with the Marketplace morning report from apm, American Public Media.

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