Illegal Turn: Will Trump’s “Energy Emergency” Work?

A whole lot to digest relating to the new Administration’s posture on energy.

The President declared an “Energy Emergency” in a spate of executive orders this week. It is unclear exactly what that means, how much power the executive has over projects at the state and local level, or monies that have already been allocated by Congress – not to mention the thousands of decisions made daily by public utilities and private industry.

Is it even what the fossil fuel industry wants?

New York Times:

While some actions lie within his purview, others may violate federal law or run counter to judicial decisions. Among other things, Mr. Trump raised the possibility of reversing the Environmental Protection Agency’s authority to regulate greenhouse gases, which has been confirmed by the Supreme Court, and proposed to halt funding for electric vehicle charging stations that Congress has already authorized.

The moves also underscore a fundamental tension. Mr. Trump declared that the United States is facing an energy emergency, yet wants to block thousands of megawatts of planned wind projectsthat could power homes and businesses. He talks about strengthening American manufacturing but plans to withdraw assistance from the electric vehicle industry, which has invested billions of dollars in new factories across the United States.

“The phrase ‘energy emergency’ is an excuse to put in place initiatives that are hostile to the energy transition that is already taking place, to stop the progress that has been made in producing solar and wind power, electric vehicles, batteries, and renewable power,” said Robert N. Stavins, director of the Harvard University Environmental Economics Program.

By any economic measure, the United States is not facing an energy emergency, experts said. America is the world’s largest producer of oil and natural gas, and the price of oil, about $76 per barrel, is roughly the same as the average cost over the past 20 years, adjusted for inflation. The cost of gasoline, about $3.13 per gallon, has dropped about 3 percent over the past 12 months.

But, Dr. Stavins added, “If there really were an energy emergency, then the right thing to do would be to increase supplies of all forms of energy, and to try to use energy conservation initiatives” — like stricter efficiency standards for vehicles and household appliances like dishwashers and stoves — to decrease demand. Instead, Mr. Trump’s executive orders are aimed at loosening those requirements so appliances would use more energy and cars would burn more gasoline.

Although some executives worry that increased drilling could lead to an oil glut that could lower prices and profits, most don’t want to be restricted in terms of where they can explore and drill. And many don’t want to see wind and solar power and electric vehicles flourish in a way that would lower demand for fossil fuels.

“This is a new day for American energy, and we applaud President Trump for moving swiftly to chart a new path where U.S. oil and natural gas are embraced, not restricted,” said Mike Sommers, the president of the American Petroleum Institute, an industry trade group.
His definition of energy is limited almost entirely to fossil fuels, although he makes exceptions for hydropower, geothermal and nuclear power. One executive order said that the phrase “energy resources” was defined as “crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals.”

There was no mention of solar panels, wind turbines or battery storage, which are three of the fastest-growing sources of electric capacity in the United States.

Chris Wright, a fracking executive who is Mr. Trump’s choice to lead the Energy Department, summed up the position of many Republicans when he said in 2023, “There is no climate crisis, and we’re not in the midst of an energy transition, either.”

Pressed by Democrats at his Senate confirmation hearing last week, Mr. Wright clarified that he believed climate change was “a global challenge that we need to solve.” He told lawmakers that he supported all forms of energy, including renewable sources, but that fossil fuels would continue to dominate energy systems for some time.

Washington Post:

Among Trump’s initial climate moves, the decision to exit the Paris agreement stands as the most internationally consequential, reinforcing a sense that the United States is an unreliable partner in the global effort to reduce emissions. That sense had been growing even before Trump’s election, as the United States expanded its oil and gas production even after joining other nations in pledging to phase out fossil fuels.

“We are back to countries performing actions in their narrow, short-term interests,” said Li Shuo, director of the China climate program at the Asia Society Policy Institute. “That will inform the judgment of all the other political capitals in the world that the zeitgeist of global climate action is not where it should be.”

Wall Street Journal:

But some donors grimace when they hear Trump promise that under his watch, crude-oil producers would open the floodgates. He has also promised to cut Americans’ energy costs by 50% or more. 

Oil backers’ skepticism stems from the fact that Wall Street has successfully pressured chronically indebted frackers to stop burning through cash, and return it to shareholders via buybacks and dividends instead of reinvesting it to frack more wells.  

“Our stocks will be absolutely crushed if we start growing our production the way Trump is talking about it,” said Bryan Sheffield, a Texas oilman who contributed more than $1 million to Trump’s latest campaign. 

Another limiting factor for shale companies is geology. Drillers are running out of premium wells, and many don’t have the runway to pump more oil than they are already.