Trumps Energy Pledge
In a single day in November, the most radically effective and sweeping environmentalist movement in U.S. history ended. Not only did it come to a halt, but some of its gains in the past eight years will likely be swept from history. In one day, with control of both houses of Congress and the election of a Republican President whose business acumen may be a more potent ally to the energy industry than any political ideology, a decade of liberal progressive policy was all but reversed.
In decades past, candidates’ promises on both sides of the political aisle did not always turn into action once elected. But Trump’s track record in business may be an indicator that what he said on the campaign trail is what he actually intends to do as President. If that is the case, then the Clean Power Plan, which pushed dozens of aging coal plants into the ash heap, is done for. The Environmental Protection Agency which had been deeply influenced by radical environmental groups will likely become a rubber stamp for the Republican agenda. New wind and solar projects could still move forward as Congress extended the production tax credit to 2021 but as to the long term development of fields of solar arrays and wind mill farms, Trump stated in November that “green energy [projects are] really just an expensive way of making the tree-huggers feel good about themselves.” (Washington Post). The U.S. will almost certainly pull out of the Paris Climate Accords, which arguably would have been ineffective anyway. Love him or hate him, he’s in… and he’s got some sweeping plans that are 180 degrees opposite those of his predecessor.
But keeping a campaign promise is sometimes dependent on whether something can be done, rather than if it should be done. In May 2016 at the Williston Basin Petroleum Conference in Bismarck, N.D., Trump made his plans for his energy policy clear in a single definitive statement: “American energy dominance will be declared a strategic, economic and foreign policy goal of the United States.” Trump’s energy policies in support of those goals (published on his website) are ambitious. But are they achievable?
**“AN AMERICA FIRST ENERGY PLAN” DONALD J. TRUMP’S VISION
- Make America energy independent, create millions of new jobs, and protect clean air and clean water. We will conserve our natural habitats, reserves and resources. We will unleash an energy revolution that will bring vast new wealth to our country.
- Declare American energy dominance a strategic economic and foreign policy goal of the United States.
- Unleash America’s $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves.
- Become, and stay, totally independent of any need to import energy from the OPEC cartel or any nations hostile to our interests.** “Energy Independence” is a concept first put forward by President Richard Nixon during the 1973 Arab oil embargo which played havoc on the U.S. economy. When Nixon made energy independence a goal within 10 years, the United States was importing 35% of its oil. By 2005, oil imports had reached 60% of total domestic consumption. Over the same period from 1973 to 2005, domestic oil production fell by over a third.
Currently, about 24% of total petroleum demand in the United States is filled by imports. Though it does seem possible to begin producing more oil domestically than is demanded (perhaps within 10 years), it is unlikely. Eliminating the need for imports would require WTI prices to consistently undercut global prices such as the Brent Crude benchmark. Otherwise, cheaper foreign oil will continue to prompt the refining industry to object to shutting out imports from the market place. It is basic economics formed on the foundation of capitalism. And if the U.S. charges forward to produce ever great amounts, foreign exporters could engage in a price war that could force global oil prices to crash once again, which in turn, could lead to another domestic crash of the industry. According to a Duke University energy economist in a recent New York times article, “Even if energy independence was achievable, it would not be desirable…Our interests tend to be best served by getting each type of fuel we need from the least expensive source, be it domestic or imported.” Additionally, our closest trade partner, Canada, from which we import more oil than we do from the entire OPEC cartel (13 nations including Saudi Arabia), could face irreparable damage to its economy, which in turn, would eventually effect the U.S. economy.
As far as returning the coal industry to its previous glory, natural gas prices would have to rise above the $4 per million btu mark for coal to once again become competitive. At present, despite the belief that the Obama administration is killing the coal industry, it is the Natural Gas industry which has been the biggest destroyer of coal fired power. For Trump’s energy independence and coal resurgence pledges to become reality, the Federal government would have to become involved in efforts to control prices. At present, such efforts would not only be unprecedented, they would essentially be illegal, and anti-capitalist.
Still, becoming more energy “dominant” is both possible and desirable as evidenced in how the shale boom provoked OPEC to declare a virtual market share war on the U.S. by not restricting production. This action proved to be a horrible gamble for the Saudi led cartel as they are now floundering under low global prices. This mis-step has seemingly made the Kingdom of Saud far less powerful in influencing global petroleum markets, and thus, making their oil less powerful as an economic weapon against the United States.
– Open onshore and offshore leasing on federal lands, eliminate moratorium on coal leasing, and open shale energy deposits. In what is seen as a “pre-emptive strike” against this pledge, on December 20th, President Obama banned offshore drilling in “large portions” of the waters off the Alaskan Coast and along a lengthy string of under water canyon areas in the Atlantic which span from Massachusetts to Virginia. Utilizing existing legislation called the Outer Continental Shelf Lands Act, this ban will be nearly impossible to reverse by the incoming Trump Administration even with the power of a Republican Congress behind him. Still, there’s a lot of federal territory along our coasts (and on land) that Trump could open for exploration.
– Encourage the use of natural gas and other American energy resources that will both reduce emissions but also reduce the price of energy and increase our economic output. This pledge runs contradictory in some respects to his plans for coal, which, as previously noted, is coal’s biggest foe. By empowering the natural gas industry, the coal industry will continue to suffer under cheap NG prices.
– Reduce and eliminate all barriers to responsible energy production, creating at least a half million jobs a year, $30 billion in higher wages, and cheaper energy. and, from His First 100 Days Plan, Trump further states that I will lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal. Multiple new regulations created by the Obama Administration which restrict fossil fuel production can easily be rescinded by Trump, and likely will be. But whether it will lead to the economic impact Trump is promising is more dependent on market forces than shear will.
* I will lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward. The Obama administration blocked construction of the northern stretch of the Keystone XL pipeline by denying a State Department permit required of trans-national projects. Trump has indicated he will green light this project – and he can.