By Julian Lee
Some U.S. oil policies are likely to shift significantly when Donald Trump assumes the presidency next year. While details remain sketchy, he’s highlighted a number of areas where he differs significantly from current policy.
Relations with the Middle East and OPEC
Donald Trump has been critical of both Saudi Arabia and Iran during the campaign. He said that he was not a “big fan” of the Saudi government in a 2015 appearance on NBC’s “Meet the Press” and told the New York Times in March that he might stop buying oil from Saudi Arabia and other Arab countries unless they committed ground troops to combat Islamic State or reimbursed the U.S. for its efforts.
Trump is also opposed to the nuclear deal with Iran that unlocked the country’s oil exports. He said in a speech to the American Israel Public Affairs Committee in Washington in March that his “No. 1 priority is to dismantle the disastrous deal with Iran.” While tearing apart the accord is “technically possible,” it is “extremely unlikely” that the other world powers that negotiated with Iran alongside the U.S. — China, France, Russia, the U.K. and Germany — “would follow our lead,” U.S. Energy Secretary Ernest Moniz said in April.
Speaking at the Williston Basin Petroleum Conference in Bismarck, North Dakota in May, Trump also promised independence from the Organization of Petroleum Exporting Countries, although he didn’t elaborate on how that would be achieved.
Keystone boost
At a press conference prior to the North Dakota event, he said he would approve TransCanada Corp.’s proposed Keystone XL oil pipeline, in return for the people of the United States being given “a piece, a significant piece of the profits.”
Trump has also pledged to renegotiate or terminate the North American Free Trade Agreement, which limits the cases in which Canada can restrict energy exports to its southern neighbor. Ending that agreement could leave the U.S. more open to disruptions to supplies from Canada, although this seems unlikely given the country’s lack of alternative export options.
Support for U.S. oil
At the same North Dakota press conference , the president elect said he would remove any restrictions on U.S. energy exports and that he would support hydraulic fracturing, although he didn’t elaborate on either.
Trump’s victory will support U.S. oil and gas production, with less regulation on exploration and a lifting of drilling restrictions in certain locations, Goldman Sachs Group Inc. analysts including Damien Courvalin and Jeffrey Currie said in a Nov. 9 report.
His support for the U.S. shale oil and gas industry has not been unequivocal, though. Trump had earlier caused concern among energy executives in Colorado when he said in July he supported letting local residents vote on fracking bans. In a statement after a meeting with oil executives in Denver last month, Trump’s campaign said he supports “safe hydraulic fracturing” and “energy production on federal lands in appropriate areas.”
“America is sitting on a treasure trove of untapped energy —- some $50 trillion dollars in shale energy, oil reserves and natural gas on federal lands, in addition to hundreds of years of coal energy reserves,” Trump said during a keynote speech at the Shale Insight conference in Pittsburgh, a summit of natural gas producers. “I am going to lift the restrictions on American energy and allow this wealth to pour into our communities.”
Wider policies
Trump said he would open federal lands for oil and gas production, and free up offshore areas to energy development.
The biggest impact on crude markets may not come from Trump’s oil policies at all given the importance of decisions that influence wider economic development, trade, and international relations.
He pledged during Wednesday’s victory speech to double economic growth during his tenure. That would imply annual expansion of 3 percent, a level last exceeded in 2005.
Against that, he’s questioned climate-change science and vowed to withdraw from the Paris agreement to limit global warming, measures that would potentially redefine the nature of global energy consumption if coal returns as a growth fuel for power generation.
Lastly, observers including UBS AG and Nordea are now considering whether the U.S. will become more protectionist. Before the vote, Trump said China was a “grand master” at currency manipulation and was stealing American jobs. He threatened punitive tariffs of up to 45 percent on the country’s imports.
Source: Bloomberg.
Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.