Trump’s love for fossil fuels to weigh on oil prices
washington — President-elect Donald Trump has pledged to boost the oil and gas sector and bring back coal, reversing President Barack Obama’s efforts to encourage renewable energy and cut dependence on fossil fuels.
But analysts say Trump’s policies could serve to worsen the global energy glut, which would reduce prices while doing little to revive the fortunes of “Big Coal”.
Trump has made no secret of his support for fossil fuels. His policy advisors include top oil industry lobbyists, fracking king Harold Hamm, and oil-rich North Dakota’s congressman Kevin Cramer. Trump has promised to eliminate regulations restricting fracking; support oil and gas pipeline construction, including the Keystone XL project blocked by the Obama administration; open now-restricted federal lands and offshore areas, for exploration, including Alaska; and end Obama’s 2015 Clean Power Plan, which aimed to cut back coal-fired power generation.
“Producing more American energy is a central part of my plan to making America wealthy again,” Trump told a fracking conference in September. “I’m going to lift the restrictions on American energy and allow this wealth to pour into our communities.” But analysts say his plans could exacerbate the global oversupply. Oil prices collapsed in 2014 principally due to the rapid build in US output that came from the revolution in fracking technology, which allowed drillers to tap difficult-to-access shale-based reserves. US crude output shot up to 9.6 million barrels a day by July 2015, nearly doubling from 5.5 million in 2010. This allowed the country to sharply cut back oil imports, and global prices sank.
Since then US output has fallen by about one million barrels, but prices remain depressed due to higher production from Iraq, Libya, Saudi Arabia and Iran. Opening up more areas to exploration would add to that supply.