(Oil & Gas 360) – “Now comes the hard part.” That’s the reality confronting every victor in a Presidential election.
After nearly nine years of placing domestic energy as one of the foundations of his “America First” platform, newly elected President Donald Trump is expected to quickly alter or outright eliminate several of the energy policies of the outgoing Biden administration.
Policy may quickly encounter economic reality on the issue of the 47th President’s promise to unleash oil and gas production domestically. Operators have instead been responding to market signals that show relatively cheap oil, suggesting that prudent operators will not alter what has emerged as some conservative drilling plans heading into next year. That said, permitting for drilling offshore and on federal lands will likely become easier quickly.
Trump has been forceful in leveraging America’s world-leading oil producer status as an instrument of foreign policy, so oil sanctions on countries like Iran, Venezuela, and even Russia are likely to factor in foreign policy strategy.
Coal could encounter some of the policy versus market considerations as oil. While there is little doubt the coal industry can expect some easing of regulatory hurdles, its role as an energy source and base load provider has slowly diminished as natural gas, wind, and solar eat into demand.
Fewer regulations and less reliance on emissions control could improve the economics of coal mining for miners. Still, it is hard to see the country, already the world’s third-largest exporter of coal, gaining much on world leader Australia and second-place Indonesia, regardless of policy changes.
As for other public policies involving mining, recall that Trump used executive orders to declare a national emergency regarding China’s dominance of critical earth minerals. For instance, he opened a National Forest in Minnesota for a copper/nickel mine there.
Beleaguered natural gas prices will likely continue to see oversupply issues in the short term, but an expectation of less emphasis on environmental justice and carbon considerations and quicker permitting approvals could provide a more certain investment climate for long-term energy infrastructure projects. Look for the Keystone Pipeline to be a major symbolic policy move in this regard, but different levels of opposition among different states for Interstate projects could stymie his efforts.
The new administration is likewise expected to leverage America’s leadership in LNG, where it is the world’s leader, to quicken export infrastructure permits, which Trump has called a “day one priority.” A moratorium on such permits was issued by the Biden administration at the start of the year but was overturned in court. Nonetheless, the U.S. remains the world’s biggest LNG exporter with exports up over 10% year over year.
On government spending, the $738 billion Inflation Reduction Act is likely to be among the first pieces of legislation to be addressed in any cost-cutting discussions within the new administration. It’s expected that credits for wind and solar would be cut and perhaps entire departments such as the $25 billion Office of Clean Energy Demonstrations. There’s even been talk about eliminating the entire Department of Energy and its $160+ billion budget.
Internationally, it’s generally conceded that Trump will once again withdraw from the Paris Agreement as he did in his first term. Some expect a similar American retreat from the United Nations Framework Convention on Climate Policy.
By Jim Felton for oilandgas360.com
