Worldenergy Blog

Trump's Energy policy could actually make the US Independent

Wednesday, November 09, 2016

Well the Votes are in and Donald Trump will be the next President of the United States.  The issues in this campaign have been numerous, recent black on white violence, national security, immigration/illegal immigration and the great wall, Islamic terrorism (at least on the republican side), climate change and of course the economy.   Trump was also not afraid to say that "Global Warming" is not on his agenda and he will finally set American energy free.

Recently the head of the IEA warned, “we should not be looking to China to push the price of oil but the United States.  If the United States economy goes through a growth period like the 80’s and 90’s we will see $100 dollar oil very soon.”

I have said that Donald Trump is the great “negotiator” and like William Shatner for Priceline, Trump claims he is going to get us a better deal.  In his one speech on Energy he proclaimed that he would reinvigorate the industry and strive toward independence. I think Energy independence is a mantra that every President since Kennedy has used as a crutch.  However, in recent years that hunt for independence has been side tracked by alternative energy exclusively.  That has meant hydrogen, wind, solar, electric cars and other "low" energy sources.  The difference a Trump administration may bring is a focus on "real" energy.

While he has not denied Climate Change, he hasn’t embraced it either. He has said that he is in favor of fracking, the XL Pipeline and increasing all domestic sources of energy that make sense.  Taking a strategy that really focuses on "all" energy resources might actually bring us to the table as an Energy Provider instead of a consumption only country.

Currently our emissions are headed down and are continuing to drop, in fact the United States has reduced emissions by 25%.  Methane emissions are dropping like a stone, we are the largest producer of renewable energy, we have the most electric cars on the road, our gasoline and diesel fuels are incredibly cheap and we have generated a surplus of natural gas.  So much so that we are building massive export facilities to export natural gas to the world.  With that as a starting point, I think a Trump Administration has an excellent foundation from which to build a "real" energy policy that could actually work.

One of the biggest pressures on our energy prices is the economy.  Currently the economies of China, Russia, India and the United States are experiencing very little growth.  The labor participation rate in the US is at an all time low and the rates of under employment and unemployment are dangerously understated.  It is true that our energy infrastructure is being dismantled by these low energy prices as companies stop drilling, let employees go and equipment is stacked or destroyed. It is true that we have unlocked the mystery of how to get energy from source rocks, however,  

The IEA is not wrong, if Trump manages to push the economy back into a growth mode, low energy prices are going to be a thing of the past and we will need to produce as much American Energy as possible.

If we are in a position to provide our own energy and export energy in the form of natural gas, coal and oil we also become a direct competitor to Russia and OPEC giving us more influence in Western Europe, Asia and Latin America.  If we are once again seen as leaders in this space we will wield far more influence on China than our carrier group in the South China Sea can, while it’s hands are tied by a policy of non-intervention.

Over the last year we have seen OPEC make a direct attack on our shale oil producers and drive many of them out of business by providing our refiners a much cheaper alternative than buying our domestic crude.  OPEC has paid dearly for that attempt, with countries like Venezuela and Nigeria in desperate straights without the income provided by high oil prices.  

In response, we have done nothing.  Except roll up our energy companies and eliminate our recent gains in production.  Trump promises to change this, with a policy that focuses on our strengths, our vast natural gas resources, our enormous coal reserves and our ability to produce from shale and not forget about new sources of energy we should be able to build on what works and take a leadership role when it comes to Energy.  In the coming months we will see if President Trump follows through on what "Candidate" Trump promised, after all he's not a traditional politician that will promise much and deliver very little.