Energy did not make any difference in who we chose for President on Tuesday. But the energy sector won biggly, nonetheless.
President-Elect Donald Trump supports an all-of-the-above energy strategy with a heavy tilt towards fossil fuels, and with no regard to climate change or regulations of any kind. Trump wants to increase American energy production to add jobs and bring the country closer to energy independence.
Trump’s energy plan proposes to remove bureaucratic blocks to innovation and energy exploration. He thinks the energy marketplace should determine the best mix of domestic energy sources.
Translation – Get rid of all regulations and let the industry do what it wants.
As Chris Helman of Forbes reports, billionaire Oilman Harold Hamm is quite happy about this, saying “On day one, [Trump] will commence by undoing the onerous regulations placed on every industry in the past eight years.” While the energy rich will certainly become even richer, the United States is already quite energy independent.
The most important effect of a Trump Presidency is that United States climate change policy and goals will evaporate, as will the Clean Power Plan, the Paris accords, any teeth in the Environmental Protection Agency, and any hope of a carbon tax. There will also be no opposition from the Feds to pipeline construction or drilling on public lands and wildlife areas.
But the oil and gas industry already has more drilling sites than it can use. What they really need are more pipelines and transport facilities. So the Dakota pipeline will get built, along with many others within the U.S., with or without federal agents showing up to ‘help’. On the other hand, the Keystone XL is not likely to get built since Canada’s new liberal government isn’t as interested anymore and it was mostly for Alberta tar sands crude.
What is interesting is that renewables should be fine. Most of the push for renewables, and many of the financial incentives, come from individual states. Red States like Iowa and Texas are overflowing with wind energy jobs and money. About the only thing doing well in Brownback’s financially-destroyed trickle-down Kansas is the wind industry.
Even more, the Republican controlled Congress already extended the renewable energy Production Tax Credit to 2021, so don’t look for renewables to decline anytime soon.
Nuclear energy fits nicely into Trump’s energy plan. Trump says, “It should be the goal of the American people and their government to achieve energy independence as soon as possible. Nuclear power is a valuable source of energy and should be part of an all-the-above program for providing power for America long into the future.”
However, to remain competitive with gas in deregulated markets, nuclear still needs market adjustments that value its reliability and low-carbon energy. As Trump gathers his energy advisors, hopefully he will include nuclear experts.
Therefore, environmental and energy regulations will simply fall to the states. That’s fine for California which already has strong regs. But this is not so fine for the people of Oklahoma experiencing growing fracking-related earthquake activity. Pennsylvania has put strong fracking regulations in place, and New York has banned it altogether.
The big unknown is coal. While many just assume coal will make a resurgence in a Trump Administration, I wouldn’t bet on it. Successful fracking for natural gas in tight shale formations has enormously increased America’s natural gas production, keeping prices low, and out competing all other energy sources, especially coal and nuclear. It doesn’t make a lot of financial sense to expand coal use again within the United States.
While fracking has its environmental problems, such as fugitive emissions and poorly-sealed wells, these are minor compared to coal mining, coal waste impoundments, and coal emissions of particulates, heavy metals, sulfur and nitrogen compounds. These latter lead to important, and costly, health care issues from burning coal, something China is now grappling with.
Many states have embraced this move from coal to gas, and a sudden lessening of federal regulations isn’t going to change that. What could change for coal is increased export to China and Asian markets. But again, the state’s control transport to sea ports, not the Feds. And the key export sites to Asia are in the states of California, Oregon and Washington which recently have killed coal terminals and rail facilities for coal. British Columbia in Canada is also not keen on coal transport through its lands.
So energy in the new Administration will be just what the industry ordered, but the states will still have a lot to say about it.