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The future of the energy industry under President Trump: part 1 – Potential Positive Policies
With the upcoming inauguration of President-elect Donald Trump in less than 10 days from now, we asked Scott Segal, partner at Policy Resolution Group, for his insight on what a Trump presidency could have on the energy industry, policies, and overall performance in the market.
In this first instalment of this series we asked what the potential positives a Trump presidency could have on the energy industry.
During the course of the presidential campaign, Donald Trump was relatively light on specific policy proposals, preferring instead to speak in broader strokes and to focus on outcomes designed to enhance economic growth, production, and energy independence. In May 2016, Mr Trump spoke before an oil and gas conference in North Dakota. And in September 2016, he addressed Pennsylvania, Ohio and West Virginia oil and gas producers and service providers at the Shale Insight conference in Pittsburgh. It is clear from these addresses Donald Trump embraces expanded production and the enhanced use of US oil and gas production to advance the goals of American foreign policy.
The first potential positive for the industry is one of attitude. Under the Obama administration, hydrocarbons had begun to look a bit like the enemy. The US Environmental Protection Agency and the Department of Interior were increasingly focused on regulating shale production even though oil and gas regulation is principally a matter for the states. The national commitments made pursuant to the Paris Agreement, coupled with regulatory limits on the use of fossil fuels – from corporate average fuel economy standards to limits on fossil fuels in electric power production – all reflected an attitudinal shift in the direction of the activist community. The decision not to approve the Keystone XL pipeline was perhaps the most visible aspect of this shift.
To say the least, the pendulum is now back in favour of production and the infrastructure, which brings those hydrocarbons back to market. We can anticipate more favourable circumstances for pipeline and power line construction, as well as extraction and use of coal. The regulatory impulse to limit shale production or to create an inhospitable offshore environment also is dampened, to say the least. That said, it is the commodity prices of oil and natural gas – largely a function of the macroeconomic trends that affect demand – that ultimately reflect the health of the energy sector.
But for the Trump Administration, at least in the near term, there is strong political support to continue to create favourable governmental policy for energy production. In many respects, Mr Trump won the White House by breaking into traditional Democratic bastions in the Upper Midwest, with appeals designed to restore faith in the traditional manufacturing sector. Shale development, for one, takes place in a part of this region, and the hydrocarbons it provides create the affordable power and feedstocks for competitive manufacturing. Scott Sheffield, the CEO of Pioneer Resources, was right when he recently noted that increased activity in production and pipeline construction is consistent with the Trump message. "His message about creating jobs is why he broke the blue wall” and attracted votes from manufacturing state Democrats, Sheffield observed.
Read part two of the series, where we ask Mr Segal to share his insights on what drawbacks the energy industry may face under the Trump administration here.
Scott Segal is a partner with PRG. He has over two decades of experience across a broad range of policy and communications issues, with particular experience dealing with energy, the environment, and natural resources. Other areas of experience range from healthcare to financial services to trade and manufacturing issues. A practising lawyer, Scott assists clients with effective participation in the legislative and regulatory processes. Read his full bio here.
Policy Resolution Group
The Policy Resolution Group (PRG) at Bracewell helps clients around the world navigate our complex federal landscape. They create and implement successful strategies to achieve our clients’ government relations objectives. PRG provides counsel and services in Legislative and Regulatory Affairs, Information Gathering and Political Analysis, Strategic Communications and Legal Representation. Uniquely, PRG delivers results across all these areas – for corporations, industry coalitions, trade associations, entrepreneurs, investors, financial institutions and government entities.
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