U.S. oil executives are looking forward to Donald Trump’s anticipated rollback of environmental regulations, but despite the president’s “Drill, Baby, Drill” promise, production will decline during his second term. A significant increase is unlikely.
Mr. Trump has made energy policy a pillar of his campaign, vowing to break through bureaucratic red tape and unshackle U.S. oil producers, increasing output and lowering prices for consumers.
President Trump declared victory early Wednesday morning, saying, “We have more liquid gold than any other country in the world. More than Saudi Arabia.”
The former president’s reelection is a boon for an industry that has had a rocky relationship with President Joe Biden’s administration. It would also be a big payoff for the corporate leaders who poured money into his campaign coffers.
“I couldn’t be more excited about President-elect Donald Trump’s victory,” said Harold Hamm, founder of Continental Resources, a donor to President Trump. “This is a monumental victory for the future of American energy and our national security.”
Jeff Miller, CEO of Halliburton, one of the nation’s largest oilfield services companies, echoed similar sentiments. “I can only think of positive things about it. I’m actually quite optimistic,” he said.
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When he takes office next January, the industry expects Trump to repeal many of the environmental regulations imposed by Biden. Mike Sommers, president of the American Petroleum Institute, said there has been an “onslaught of regulation” over the past four years that will now be reversed.
“Just a signal from the administration that they want to see a healthy U.S. oil and gas industry will be a key element in getting this industry the investment it needs to continue to grow,” he said.
Among the changes the industry expects are the elimination of emissions regulations aimed at steering drivers toward electric vehicles, greater access to hydrocarbons through increased leasing of the Gulf of Mexico and public lands, and protection of endangered species. This includes dilution of . President Trump is also expected to lift a moratorium on new licenses for liquefied natural gas terminals.
President Trump vowed to lower corporate taxes and opt out of Biden’s signature climate bill, the Curbing Inflation Act. However, many in the industry benefit from the IRA and are lobbying against its complete removal.
President Trump has already begun assembling a team to handle these changes. North Dakota Gov. Doug Burgum is vying for a new “energy czar” role to coordinate a push for deregulation across a patchwork of government agencies.
But despite expected regulatory reforms, analysts warned that production is unlikely to increase rapidly during President Trump’s second term. Production reached record levels during Biden’s term, reaching a new high of 13.4 million barrels per day in August despite restrictions.
But investors, fueled by years of debt-fueled drilling binge, want companies to prioritize profits over growth. The model of capital discipline they have imposed on the sector is unlikely to change.
“Price and Wall Street are the regulators of U.S. production, not the president,” said Jim Burkhard, head of oil market research at consultancy S&P Global.
Production is expected to average about 13.2 million barrels per day this year, rising to 13.6 million barrels per day in 2025, but will likely decline next year due to lower prices, according to S&P. Trump’s re-election does not change the short-term outlook.
But macroeconomic factors could help President Trump keep his promise to sharply lower prices. A combination of weak Chinese demand and OPEC+ supply expansion plans are likely to push prices down in the coming months. But it will have a negative impact on oil producers.
“The market is oversupplied because the Chinese economy is not supplying the demand that it has in the past,” said Daniel Yergin, a Pulitzer Prize-winning energy historian and author of “The New Map.” “This is the largest overhang for the world and U.S. oil industry.”
Bob McNally, president of consultancy Rapidan Energy and former energy adviser to the George W. “There are very limited means to influence oil prices.” In a few years, President Trump “may get lucky and see oil prices plummet.”
“But he will relearn the lessons of 2020: lower oil prices may please consumers, but they also hurt the U.S. shale oil sector.” said. “In fact, the biggest threat to the U.S. shale sector is a sharp decline in oil prices.”
During his first term, Trump demonstrated a desire to play an active role in shaping oil prices. In 2018, he forced OPEC to increase production to bring down prices, but then cut production in 2020 to save the U.S. shale patch from bankruptcy as prices plummeted due to the coronavirus pandemic. I persuaded them to cut back.
President Trump has also vowed to apply maximum pressure on Iran, increasing sanctions on Iran’s oil exports, which could push up global oil prices.
One of the most fundamental changes sought by the industry is that President Trump, aided by Republican control of the Senate and possibly the House of Representatives, will pass sweeping permit reform legislation after years of failed attempts. It is to pass.
Alan Armstrong, head of pipeline giant Williams, said: “I’m very hopeful that Republican control will increase and that permitting issues will finally be addressed in a durable and meaningful way.”
Despite President Trump’s plans to roll back environmental regulations, analysts expect big oil companies to remain motivated to curb emissions, especially when it comes to methane, a potent greenhouse gas.
Paul Bledsoe, former climate change adviser in the Bill Clinton administration, said: “Donald Trump’s election does not erase expectations for reducing emissions and investing in clean energy.” I think so,” he said.
“I think that’s what the public expects. That’s what investors expect.”
