Oil and gas in the capitals: Trump election boosts prospects for domestic oil industry

DAVID BLACKMON, CONTRIBUTING EDITOR, WASHINGTON/REGULATORY AFFAIRS 

Fig. 1. President-elect Donald J. Trump. Image: Official U.S. government photo.

U.S. Oil & Gas Association President Tim Stewart told me his association’s members “won’t wake up every morning, wondering what really bad policy idea the administration will drop on them that day.” Steward referred to the last four years as “the most challenging legislative and regulatory climate our industry has had to live through in our 160-year history. We are all breathing a sigh of relief.” 

Indeed, there was a general sense of optimism about what the next four years will bring in the way of federal energy policy from industry leaders who spoke on the record in the days following the election. 

Admitting she had faced Election Day with trepidation about “staring down the barrel of another four years of the hostile Biden/Harris Administration’s anti-oil-and gas policies,” Western Energy Alliance President Kathleen Sgamma (Fig. 2) said she was thrilled to wake up on Nov. 6, “knowing that we’re going to return to the energy dominance agenda of the first Trump term.” 

Fig. 2. Western Energy Alliance President Kathleen Sgamma. Image: Western Energy Alliance

Indeed, former and future President Trump will be able to hit the ground running with what is likely to be dozens of executive orders in his first week in office, as well as recissions of hundreds of relevant orders issued by outgoing President Joe Biden. 

Reversing regulations and laws that Trump and his appointees will consider to be damaging and ill-founded will require far more work. Passing legislation will also require the cajoling of Congress, and prospects for success in this realm could be limited, due to the slim GOP margins in both houses.  

Overall, though, the U.S. oil and gas industry is again entering a positive policy environment coming out of Washington, DC. For this great American industry, it really is “morning in America again.” 

A TARGET-RICH ENVIRONMENT FOR BIG POLICY ACTIONS 

“President Trump has made it clear that unleashing our energy potential will be a high priority for him and his administration,” says Tom Pyle, President of the D.C.-based energy think tank, the Institute for Energy Research. Pyle sees a landscape full of opportunities for which the new administration can make a big and immediate impact on the energy policy landscape.  

Pyle points out that IER “identified over 250 specific actions that the Biden/Harris Administration has taken to make it more difficult to produce oil and natural gas, here at home. At the same time, President Biden’s so-called Inflation Reduction Act has saddled taxpayers with billions in corporate giveaways for green energy sources, making our electricity less reliable and more expensive. And finally, by attempting to mandate the types of cars we can drive or stoves we can put in our homes, the current administration is deliberately driving up costs and making daily life more difficult for everyone.”  

It is a target-rich environment for making real, impactful changes in energy policies that are designed to lower energy costs for American consumers and begin the process of returning reliability and stability in the power grid.  

Here are some things you can be sure will happen in a second Trump administration: 

• Fracing will remain legal, safe, and properly regulated at the state level; 

• The irrational, baseless LNG permitting pause will be rescinded on the day Trump assumes office, if not sooner; 

• The federal oil and gas leasing program, which has remained moribund during the Biden/Harris years, will be quickly restored to comply with the governing laws; 

• Efforts to reverse the various attacks on gas stoves and other gas appliances; 

• A focused effort to refill the U.S. Strategic Petroleum Reserve (Fig. 3) that has been so depleted by Biden. 

Fig. 3. A Strategic Petroleum Reserve facility in the southern U.S. Image: U.S. DOE.

Some things you can be sure will not happen in a second Trump administration: 

• Cancellation of any job-producing energy-related infrastructure project (like Keystone XL, as an example) by presidential edict; 

• Any effort to force Americans to buy electric cars or any other form of transportation not of their liking or free choice; 

• More federal subsidies for wind or solar projects; 

• Allowing a “climate czar” like John Kerry to commit the U.S. to international climate deals, despite lacking any constitutional authority to do so; 

• Presidential support for offshore wind projects sited in known whale or bird migration pathways. 

Regardless of the process involved, Karr Ingham (Fig. 4), a highly respected petroleum economist who recently became President of the Texas Alliance of Energy Producers, says the new outlook will come as a breath of fresh air to an industry that has been under constant attack by the Biden people.  

Fig. 4. Texas Alliance of Energy Producers President & Economist Karr Ingham. Image: Texas Alliance of Energy Producers.

“It is beyond important and consequential to the whole of the U.S. economy that the incoming Trump administration will not govern from a starting point of foundational contempt for petroleum energy broadly, and the U.S. domestic oil and gas industry specifically,” Ingham said.  

THE FUTURE OF THE IRA 

One of the most damaging of the array of inflationary policy actions of the past four years is the Orwellian-named Inflation Reduction Act. When asked if he thinks Trump should seek a full repeal of that law and its hundreds of billions of dollars in subsidies for so-called green energy, Ingham responded with an emphatic “I certainly hope so,” adding that he and his members will be actively encouraging action on that front. 

Ingham is especially focused on gaining repeal of the “Waste Emissions Charge” contained in the IRA, which will function as nothing more than a tax on methane. “Texas members of Congress in the House and Senate alike have introduced legislation to repeal the methane tax, and frankly, much of the spending boondoggle that is the IRA should simply be eliminated,” he told me, adding, “the Republicans have a grand opportunity here, and who knows how long it may last or when it may come around again. Don't blow it.” 

Stewart says he has learned that both the House and Senate will “take a hard look at all of the IRA provisions” as possible targets for repeal, and believes they’ll be able to do it via the budget reconciliation process. This means the Republicans would only need a simple majority in the Senate.  

Pyle questions the wisdom of providing IRA subsidies to big corporations that are often based outside the U.S., given that their inflationary impacts result in higher energy costs for American consumers and rate-payers. “Why on earth should we be subsidizing these big companies when many of us are struggling to get through the month without going into further personal debt?” he asks. Pyle adds that doing away with such subsidies will provide budget offsets for some of the tax cuts that Trump has promised for ordinary Americans. 

THE BOTTOM LINE 

There is a general consensus that Donald Trump was caught a bit off-guard by his first election victory in 2016, and thus was not as well prepared as he could have been to hit the ground running when he assumed office 10 weeks later. That is far from the case this time, as Trump has been well positioned for victory since May.  

That all bodes well for the new administration to start making big impacts to energy policy on Day 1 of Trump’s second term. Given the new President’s real appreciation for the positive impacts brought by a healthy domestic oil and gas industry, no one should be surprised that the industry’s leaders woke up in a better mood on the morning of Nov. 6.