Oil price graph, oil pump nozzle and stock market chart
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By Michael Maher and Anna Mikulska
U.S. energy leadership was an international theme in the Trump administration. It demonstrated a commitment to the U.S. energy industry as part of achieving energy independence at home and advancing overseas energy security with U.S. energy exports as levers to further U.S. foreign policy goals. bring forward. The administration saw traditional energy sources such as oil, gas, and coal as the best vehicles for delivering on that promise.
Have the policies to recommend these areas been successful?
First we come to the conclusion that the same goal has not been achieved. Despite strong claims by President Trump for coal, the latter did not succeed. Any direct measures to help coal by the President were swiftly ignored or directly opposed even by Trump’s own FERC officials. Indirect ones, such as the reinstatement of the Clean Energy Plan, have failed to compete with cheap and abundant natural gas and renewables.
Between 2016 and 2020, coal consumption in electricity generation – which accounts for almost all (90% +) of total U.S. coal consumption – fell by about 35% (694 vs. 447 million tonnes) and natural gas consumption in electricity generation rose by almost 16% (11,328 vs 13,113 million BTU) (EIA). Wind and solar generation also rose (although even with an impressive growth rate (49% and 142%, respectively) it still produced only 7% (wind) and 3% (solar) of net electricity generation. U.S. in 2019. In fact, many coal companies had to seek federal breach protection, including the coal giant Murray Energy as well as Blackjewel Mining, and Cloud Peak Energy.
In contrast – at least, until the outbreak of the COVID-19 pandemic – U.S. oil and gas production thrived as:
· Oil production rose by 38% between 2016-19 [EIA] how oil prices climbed. Oil prices (WTI per month) rose from a low of $ 50 / barrel in early 2017 to a peak of nearly $ 71 / barrel in July 2019, and largely hid in the $ 50 + range throughout February 2020. The coin then collapsed, as too many met across the globe, exacerbated by a price war with OPEC as well as Russia, against the pandemic. The combination of the two forces moved prices below $ 20 in April 2020.
· U.S. crude oil exports grew from 0.2 MBD in 2016 to 1.1 MBD in 2019. And combined exports of crude oil and refined products surpassed imports in October through December 2019 with the U.S. becoming net exports for the year 2020 for the first time since 1973.
· US natural gas production increased by more than 28% and pipeline / LNG exports doubled between 2016-20; the U.S. became a net exporter from 2017-2020 annually for the first time since the late 1950s.
The growth in U.S. oil and gas production was driven by the sharp growth in global demand; about 11% between 2016-19. Moreover, when President Trump took office in January 2017, the U.S. oil and gas sector was benefiting from policies introduced by the Obama administration. Specifically, these policies included: 1) an end to the U.S. crude export ban that reflected a binding restriction on the U.S. domestic market; 2) agile LNG export project licensing process; 3) a relatively complete water breakage policy; and (4) continued leasing of onshore and offshore federal land for oil and gas development.
The Trump administration followed suit as it encouraged the approval of LNG export projects, reducing the bottles in the federal licensing process. It also facilitated leasing of federal land and opened up new areas for exploration, including the offshore Atlantic and West Coast areas and the National Arctic Wildlife Shelter (ANWR). ).
That being said, in 2016-2019 almost every increase in U.S. oil and gas production occurred on non-federal land and only one of the Trump administration’s permitted LNG projects has moved to the level construction. Going forward, bipartisan opposition in Congress could lead to the revocation of ANWR drilling provisions from the Taxation Act.
Also, the impact of much of the rental activity has not yet been realized. Why? Initially, the shale depopulation occurred largely on private – not federal – land. Moreover, in states such as New Mexico where federal land is an important source for coal production (approximately 50%), additional rents were not used immediately; instead, producers have developed rental stocks to offset the impact of any future ban. Eventually, the U.S. coal industry began to struggle even before the outbreak of the COVID-19 pandemic, as prices began to fall and investors became less enthusiastic about potential outcomes.
And then there’s the problem of “rule by order,” a practice that U.S. administrators are increasingly using, including the Trump administration, to remove many of the President’s unsupported policy choices enough in Congress to implement. Given the ease with which a regulatory order can be issued (that is, as opposed to a legislative act), it is equally easy to restore that order. In addition, execution orders are often law enforcement. Consent may further delay implementation.
Take, for example, the 2020 final release of U.S. automotive fuel efficiency standards enacted under President Obama and the regulatory order to restore Obama’s veto of the Keystone Pipeline. Delays in approval meant that – despite Trump’s election loss – President Biden was able to prevent the construction of the pipeline by opposing Trump’s order of action with one of his own. And while President Trump signed an action order in early 2017 to approve the construction of the Dakota Access Pipeline, allowing operations to begin in June of 2017, ongoing legal action is linked to the current environment threatens to close the pipeline. On the natural gas pipeline side, despite Trump administration support, New York State has refused to grant permits and has banned the construction of the Northeast Supply Development (NESE) pipeline project.
Also, in terms of advancing U.S. interests around the world through a policy of “power control,” the Trump administration’s record of success is mixed at best.
On the one hand, the administration’s regulatory policy has been successful in reaping the benefits of U.S. coal shale in the field of foreign policy, imposing sanctions on two oil-producing countries, Venezuela and Iran, without significant impact oil prices.
But while another set of sanctions, imposed in December 2019 on a Russian-to-Germany gas pipeline (Nord Steam 2), was not successful, the pipeline was not completed, it did not e significantly affects U.S. LNG export volumes to Europe. Instead, lower levels of Russian gas were pouring into Europe at the beginning to mid-2020 as a result of market factors such as: 1) high levels of global LNG supply that entered markets early in 2020; 2) lower demand caused by warm winter and growing pandemic; and 3) more flexible contract terms that allowed the export of only Russian piped gas, Gazprom a few years ago. And while U.S. LNG exports to Europe hit record highs in early 2020, many were put off by the middle of the year without being able to compete with other LNG suppliers on price.
Some of the Trump-administered domestic policy changes aimed at supporting oil and gas development have reversed internationally. For example, the recent reversal of methane emission regulations has recently become an excuse for the French government to enter into a long-term contract for U.S. LNG. Moreover, even though China’s revenge in the trade controversy against U.S. natural gas and oil exports has been scarce if it had any impact on total U.S. export volumes, this is as resulting in increasingly interconnected and interconnected oil and gas markets, which have redirected U.S. supply elsewhere. And, in the long run, the issue is prioritizing foreign countries using U.S. exports as a ploy in trade disputes. A high level of oil and gas exports could not prevent the U.S. from losing some of its impact and international status associated with the exit of the U.S. from the Paris agreement, a move that an international community is widely seen in a negative light.
That is not to say that the four years under Trump have been uncertain, for example if we are considering a position against the Clinton administration. The latter is likely to follow the path set by Obama as well, but with changes toward greater regulatory control and higher environmental standards that U.S. oil and gas production would have to meet. Also, in the long run Trump’s policies can be important for the development of the oil and gas industry on federal territory with the bilateral licenses granted between 2017 and early 2021. As previously pointed out, these actions have led to the immediate improvement of the departments’ position. beyond what domestic and international markets would otherwise allow. And some could be seen as putting U.S. oil and gas producers at a disadvantage, again, in the short term.
In general, however, the industry rose and fell largely based on global economic and energy market conditions rather than new federal energy and environmental policies. These market conditions were hard workers for the industry in 2020, when global oil overcapacity coincided with Covid lock locks across the globe. As the world economy recovers, we expect the current market effects to continue to shape the future of the U.S. oil and gas industry. Even with an aggressive push for renewables and EVs in the U.S. and Europe, U.S. oil and gas fortunes will still be largely driven by the thirst of Asia and the rest of the developing world for oil and gas production. more to drive economic development for the next decade or so.
Michael Maher he is a senior program advisor for the Center for Energy Studies at Rice University’s Baker Institute of Public Policy. Follow him on Twitter @ MichaeMaher200A
Anna Mikulska he is an unscrupulous associate for the Center for Energy Studies at Rice University Institute of Public Policy & a senior at the Kleinman Center for Energy Policy and Foreign Policy Research Institute.