By Ed Crooks, November 11, 2016
“Between a battle lost and a battle won, the distance is immense and there stand empires,” said Napoleon. The same is true of elections.
Donald Trump may have come slightly behind Hillary Clinton in the popular vote for the presidency, but his convincing victory in the electoral college will give him the ability to reshape the energy industry in the US and around the world.
His hand will be strengthened by Republican control of Congress. Parts of Mr Trump’s agenda will face resistance in Congress, but his energy policy is unlikely to be one of those areas. His support for oil, gas and coal, his commitment to deregulation and his rejection of climate policy are all well aligned with mainstream Republican thinking.
Having the opportunity to appoint at least one justice to the Supreme Court will also be important: many of the key issues in US energy have been fought out in the courts in recent years.
Many of Mr Trump’s plans can also be implemented without legislation, by regulatory rule-making and executive orders. With Congress against him, President Barack Obama was able to advance his energy and climate agenda only by using his executive powers, and those measures can be reversed in the same way.
That does not mean change will always be immediate. In some cases there will be a formal rule-making procedure to be followed. The direction of travel is clear, though. Harold Hamm, the billionaire CEO of Continental Resources who has been tipped as a possible energy secretary in the new administration, told the FT that deregulation to stimulate investment and job creation would be Mr Trump’s priority. The controversial Keystone XL oil pipeline from Canada to the US, blocked by Mr Obama last year, is now back on the agenda.
One of Mr Obama’s signature initiatives, the Clean Power Plan – the new package of regulations for curbing carbon dioxide emissions from electricity generation – is likely to be one of the first of his policies to be discarded by Mr Trump.
Inside Energy had an excellent overview of Mr Trump’s objectives, and the challenges he might face.
In another signal of his intentions, Mr Trump is reported to have picked Myron Ebell of the Competitive Enterprise Institute, a free-market think-tank, to lead his transition team for the Environmental Protection Agency. The CEI says Mr Ebell leads a coalition of groups that “question global warming alarmism and oppose energy rationing policies.” He has also been described as “enemy #1 to the current climate change community.”
Mr Trump has in the past described climate change as “a total hoax”, “created by and for the Chinese” and “bullshit”. During the campaign said he would “cancel” the Paris accord agreed last year. He can’t actually cancel it, but he could take the US out. The FT’s Pilita Clark reported that his election had brought an “abrupt halt” to rising optimism about global co-operation on climate change, casting a shadow over the COP 22 talks in Marrakesh. Some, including the World Resources Institute, suggested Mr Trump and his team would come round to the idea that “smart climate action can promote economic growth, bringing good jobs across America’s heartland”, and that climate policy was a core part of US diplomacy. Brad Plumer at Vox, however, argued Mr Trump “looks like a disaster for the planet”.
Another issue for US international relations likely to be shaken up by Mr Trump is the deal with Iran over its nuclear programme, considered by the FT’s Najmeh Bozorgmehr here. Richard Nephew, who worked on the deal at the Obama administration and is now at Columbia University’s Center on Global Energy Policy, assessed what the future might hold, and warned of “the threat that would be created to US and allied interests from reversing the deal”.
Mr Trump’s aspiration to boost US oil production and cut imports also looks like more bad news for Opec. The cartel was already struggling with its plan to cut production, reflected in its difficulty in even agreeing what Iraq’s production is now. Opec published its November monthly oil market report on Friday, and then updated it after “direct communication data for October crude oil production from Iraq.” Another ominous sign for Opec: US oil producers are strengthening their hedges, to protect revenues if prices keep falling.
Finally, some history. Today is Veterans Day in the US, Armistice Day in the UK, and Remembrance Day in Canada and several other countries around the world, a date chosen to mark the end of the First World War 98 years ago. Timothy C. Winegard, a Canadian historian and former soldier, wrote about the central role of oil in that conflict. His new book on that subject, ‘The First World Oil War’, looks fascinating.