The future of the energy industry under President Trump: part 5

Key Questions

With President-elect Trump’s inauguration tomorrow, we are concluding our five-part blog series with two key questions. Over this series, Scott Segal, partner at Policy Resolution Group, has shared what impact he thinks the Trump presidency will have on the energy industry, policies, and overall performance in the market. In this final instalment, Mr Segal gives his thoughts on two critical questions: what foreign oil and gas companies operating in the US should be aware of, and if we will see $100 oil again in the next four years.

What should foreign oil and gas companies operating in the US market be aware of under the new administration, and will there be an impact on them in particular?

There is little reason to suspect that as a general rule the US will become a less hospitable place for foreign energy corporations to do business. The generally light touch that can be expected from the new administration, coupled with reduced tax burdens, might even improve circumstances for foreign interests looking to do business here. 

Foreign press accounts after election day seemed to favour the notion that European energy majors and oil field service companies might even seek to strengthen ties to the US market under the Trump Administration. The Spanish press pointed specifically to Repsol SA’s activities in Alaska as a particular beneficiary. 

But the balancing act may come down to how far the new administration will push its protectionist rhetoric and its distrust of international agreements like Paris. If taken too far, such activities could create the basis for international retaliation against the US. This could make US markets less open, and could reduce foreign market availability to US goods and services. 

Will we see $100 oil again under the Trump Administration?

Governmental regulation is not as dispositive regarding the price of oil as is demand. Of course, if governmental policy can stimulate economic growth, and therefore demand, then you are on the road to higher commodity prices. As noted above, while markets are reacting quite positively to the prospects of a Trump Administration, the potential for protectionism or near-term overheating of the economy could reduce economic growth as the administration continues. Hopefully, appropriate reading of the macroeconomic tea leaves will keep the next administration from this dangerous course.

Experts in the field look at international trends – from growth to demographics – and conclude that conditions that might produce $100 oil seem unlikely in the near term. But stimulating economic growth, decreasing production costs, and helping to establish new markets overseas are important elements to a strategy that would help restore value to oil and gas commodities.

President-elect Trump’s inauguration is within view and the energy industry is keen to see what changes his administration will bring.

Catch up on the rest of our insight series before tomorrow. Read Potential positive policies here, Taking a look at both sides of the coin here, What will become of President Obama’s environmental legacy? here and Taking a look at personnel safety here.

Scott Segal is a partner with Policy Resolution Group. 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 GroupThe 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.