Rashid Husain Syed is a Toronto-based journalist, consultant and energy analyst. For almost 25 years, he served as vice-president of a leading Saudi trading and consulting house.
The Donald Trump era is about to begin. If the commitments and pronouncements made by the U.S. president-elect are any indication, disruptive and tectonic policy shifts could be in the pipeline for many sectors, and energy is no exception.
In past presidential campaigns, energy was often cited as one of the issues confronting the world’s last superpower. But this campaign was different. Energy was mentioned, yes, yet courtesy of the shale revolution, there was no real debate. After all, the U.S. is no longer as dependent as it used to be on imported oil, especially from the unstable Middle East.
The fine print of Mr. Trump’s energy policy has yet to be made public. As John Kemp of Reuters wrote this week, “Trump’s energy-related policies are probably not even known in detail to the president-elect himself – much less knowable by anyone else.”
Still, broad hints were dropped during the campaign. The Republicans have always been close to the fossil-fuel industry. The president-elect has vowed to boost U.S. oil, natural gas and coal production by rolling back regulations and increasing drilling on federal land. The U.S. Bureau of Land Management issued 852 leases for oil and gas drilling on a total of 810,000 acres last year. That’s down from a five-year high of 2,188 leases issued in 2011 for more than two million acres of federal land.
“America is sitting on a treasure trove of untapped energy – some $50-trillion in shale energy, oil reserves and natural gas on federal lands, in addition to hundreds of years of coal energy reserves,” Mr. Trump said during a keynote speech at the Shale Insight conference in Pittsburgh a couple of months ago. His intentions are clear: Open federal lands for oil and gas production and free up offshore areas to energy development.
The nationalist in Mr. Trump has also been talking about further reducing U.S. dependence on Middle East oil. Speaking at the Williston Basin Petroleum Conference in Bismarck, N.D., in May, he vowed to stop buying oil from Saudi Arabia and other Arab countries unless they commit ground troops to combat the Islamic State or reimburse the United States for its efforts.
Climate policy appears to be another looming casualty. Vowing to overturn the Obama administration’s Clean Power Plan and ending the “war on coal,” Mr. Trump seems far less concerned about global warming and climate change. He wants to dismantle the Paris Agreement targets agreed to by nearly 200 countries, underlining that he does not accept the scientific evidence that climate change is real. The green lobby is in for some hard work over the next four years.
Another impact of the change in guard in Washington could be the Keystone XL pipeline project. This may get a boost, but it will come at a cost. Mr. Trump seems ready to approve it, provided that the United States gets a “big, big chunk of the profits, or even ownership rights.” Campaigning in Iowa last January, he made his terms for the pipeline very clear: “I want 25 per cent of the profits for the United States … forever.”
Mr. Trump has also been critical of the deal under which Iran agreed to curb its atomic program in exchange for relief from sanctions. Addressing the American Israel Public Affairs Committee in May, he said: “My No. 1 priority is to dismantle the disastrous deal with Iran.” Whatever steps he takes, this rhetoric in itself would impact the enthusiasm of oil majors looking to get back into Iran, which could mean a stutter for Iranian output growth.
All these issues carry serious and long-term implications for global energy. If climate issues are pushed to the sidelines, agreed-to deals are set aside and the existing global energy order and geopolitics are tampered with, the industry could be in for some real instability.Report Typo/Error
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