The unexpected has happened. Donald Trump will be the next president of the United States of America, after beating the odds and the polls the U.S. media had come out with, expecting a win for Hillary Clinton.
While the win for the Republican presidential candidate has been confirmed, it may be too early to say what this will mean for the U.S. energy sector, as Trump will take office in January 2017.
That this might be a tough call to give at the moment says the energy intelligence group S&P Global Platts. According to Platts, analysts say it is impossible to determine just how much of an impact a Trump administration may have on domestic supply because of a number of shifting factors, particularly prices.
However, both S&P Global Platts, and Douglas-Westwood, another energy sector information group, have shared their views on the election results, deeming the new U.S. President-elect a more positive outcome for the oil and gas industry than Hillary Clinton. The two firms have also agreed that this might be a blow to the renewable energy industry.
Douglas-Westwood says that Trump’s policy on energy centers around the concept of ‘energy independence’ and the development of domestic oil, gas and coal reserves and suggests a “freer regulatory environment.”
He has pledged to open onshore and offshore leasing on federal lands and eliminate a moratorium on coal leasing and open-shale extraction.
On the other side, both energy information powerhouses point out that Clinton had called for stricter limits on oil and gas production and hinted she would confine U.S. offshore oil and gas production to the Gulf of Mexico, without opening the U.S. Atlantic and Pacific waters for drilling.
According to DW’s post-election comment, Hillary had campaigned for an expedited transition to renewable energy sources, and had targeted a reduction in domestic oil consumption by 6.5 million bbl/d as a national goal, to be achieved by 2027 with tighter vehicle efficiency standards (recent automotive efficiency gains have been modest – improving 2.5 miles/gallon for new vehicles over five years) and “through cleaner fuels”.
“A reduction on this scale would have approximately halved anticipated annual liquid consumption growth globally (the equivalent of 650,000 bbl/d) and would likely have become a primary factor in an extended period of depressed crude and LNG prices,“ DW’s Matt Loffman wrote in a comment on Wednesday.
Welcome news for oil, blow for renewables
While we would need to wait and see what happens after Trump takes over as President, Platts says he will “likely rebuff” any environmentalist attempts to curb domestic fossil fuel production and will likely give U.S. producers access to far more on and offshore plays than Clinton would have.
“I think it’s like the production of anything, if you have access to more of it, you’re going to have more,” North Dakota Representative Kevin Cramer, a Republican and top Trump energy adviser, has been quoted by S&P Global Platts as saying. “In fact, whether it correlates to more overall production or not, it certainly provides a diversity of opportunities for producers so that, with a low market price, they can pick the most productive places to drill with the greatest efficiencies.”
Platts writes that Trump might ditch, or at least weaken, efforts by EPA and the Interior Department to regulate methane emissions from oil and gas operations, and end incentives for renewables, which could boost near-term demand for fossil fuels.
Providing a conclusion to his post-election comment on Wednesday, DW’s Loffman said: “Whilst the result is undoubtedly a blow for the renewable energy industry, the historic election result is perhaps welcome news for a hydrocarbon industry that has been on the ropes for over two years.”
Offshore Energy Today Staff