President Trump, during his first term, largely delivered for an oil and gas industry that is facing financial stress and increasing public scrutiny, providing tax cuts and cutting regulations.
But the end of his term was marred by an oil price crash caused by the coronavirus pandemic. And his “energy dominance” agenda is threatened by growing environmental concerns and the prospect of a Biden administration undoing Trump’s work and restricting fossil fuel development to combat climate change.
“Energy gains have not been cemented and remain highly vulnerable to rollback and litigation,” said Tristan Abbey, a former Republican staffer on the Senate Energy and Natural Resources Committee who also worked on energy issues in the Trump administration’s National Security Council.
As the oil industry continues to struggle with weaker-than-expected demand recovery, and much of Trump’s policies hinge on positive court outcomes, his administration’s efforts to promote fossil fuel production and exports might best be remembered for helping to avoid a worse fate.
“Compared to a world where Hillary Clinton had won, the oil and gas industry fared spectacularly under Trump,” said Bob McNally, president of Rapidan Energy Group and former oil official in the George W. Bush administration. “They didn’t just dodge a bullet. They dodged a salvo of cannonballs.”
But critics say Trump has been harmful for the oil industry in the long term. They say that sloppy legal work has made Trump’s deregulatory policies vulnerable to court defeats and argue his single-minded focus on boosting fossil fuels at the expense of addressing climate change has accelerated business and investor movement away from oil and gas.
“I don’t think Trump delayed problems for industry — he has made them worse,” said Ben Ratner, a senior director with the Environmental Defense Fund+Business. “It would have been a much stronger strategy for oil and gas to strengthen the regulatory framework that would inspire rather than lessen public and investor confidence.”
‘Energy dominance’ set in motion
Trump’s first utterance of “energy dominance” came during a May 2016 speech at the Williston Basin Petroleum Conference in North Dakota, according to Kevin Book, managing director for research at ClearView Energy.
The term came to mean producing more domestic oil and gas, moving it to the coasts by easing approvals for pipelines, expediting the shipping of it overseas, using energy as a geopolitical weapon, and reducing reliance on Middle East imports.
That trend started in the Obama administration, when it reached a deal in 2015 with then-Republican House Speaker Paul Ryan to lift the crude oil export ban.
But it accelerated in the Trump administration. Trump quickly moved to open more areas to oil and gas development, including the long-off-limits Arctic National Wildlife Refuge in Alaska, as part of the GOP tax cut bill.
The United States became a net total energy exporter last year for the first time since 1952 after crude oil production hit as much as 13 million barrels per day from around 9 million barrels per day when Trump was inaugurated.
“The Trump administration created a regulatory framework that provides a level of certainty and is not increasing costs either for industry or the consumer,” said Frank Macchiarola, senior vice president of policy, economics, and regulatory affairs for the American Petroleum Institute. “We are in a competitive market for a global commodity. We want the U.S. to have an advantage.”
Ally for oil during pandemic
That enabled Trump to play an influential role this summer in helping mend a price war between Saudi Arabia and Russia, the two largest producers outside the U.S., that was exacerbating the pandemic-fueled demand collapse.
The president’s willingness to work with Saudi-led OPEC after years of criticizing the group for coordinating on production levels led to a record output-cutting agreement that helped stabilize prices.
“Trump was a lifelong hater of OPEC, but he had a road-to-Damascus conversion that had direct implications for the health of the shale sector,” McNally said.
Industry officials and analysts also credit Trump with rejecting calls from Republicans in fossil fuel states during the price crash to apply tariffs on imports of crude, along with his administration making financing available to oil and gas producers.
Environmental groups and Democrats had said lending programs authorized in Congress’s CARES Act should have excluded the oil and gas industry, in order to avoid rewarding some small producers struggling financially before the pandemic.
“Overall, they took the right steps and resisted suggested proposals from others,” Macchiarola said.
Trade tensions and flip-flops
Dan Eberhart, CEO of the oil services company Canary and a Trump donor, said the president’s record has been more “mixed.” His trade war with China has made life harder for oil companies that rely on steel in their supply chains.
“Too often, the administration has raised the specter of tariffs that have created a really challenging environment to operate,” Macchiarola said.
Some of Trump’s high-profile efforts to approve pipelines have failed or are mired in litigation because it skirted environmental review requirements.
The Trump administration has only succeeded in 17% of environment-related deregulatory court cases, according to a tracker by the New York University School of Law.
In a recent move before the election, Trump aggravated the oil industry by flip-flopping on offshore drilling, imposing a 10-year extension of a moratorium on development in the eastern Gulf of Mexico and expanding it to the Atlantic Coast, in order to placate vulnerable Republicans fearful of spills.
Abbey said the expanded offshore drilling ban could be especially difficult to reverse as Democratic nominee Joe Biden has proposed banning new development on all federal lands and waters.
“Energy dominance ends as an epic missed opportunity,” said Abbey, who is now president at Comarus Analytics.
Watch the courts
Book says Trump’s most long-lasting imprint on the prospects for oil and gas might take longer to realize.
Trump, with the help of Senate Majority Leader Mitch McConnell, has installed more than 200 judges to federal courts and has a chance to give the Supreme Court a 6-3 conservative majority if Amy Coney Barrett is confirmed.
“One of the things he has brought to the oil industry is hundreds of strict, traditional judges,” Book said, suggesting they would be more inclined to uphold the Trump administration’s narrow interpretation of agencies’ environmental regulatory authority.
But if Biden were to win and Democrats end the filibuster to pass new climate legislation opposed by the oil industry, Trump’s judges committed to read the law as written may not be inclined to interfere.
“This is by far the most pivotal election for energy policy bar none,” McNally said.
