Trump against Biden means "Drill baby drill" fighting the road to net zero

As we expected, Mr Trump emerges from New Hampshire as the likely winner of the race to be the Republican Presidential candidate. It is time to start considering what a Trump second term would look like, were he to win the presidential election itself.

| 6 min read

Donald Trump has used the old Republican slogan from 2008, Drill baby drill. Made famous by Sarah Palin in her debate against Joe Biden to become Vice President in that year, it was retired following the Horizon oil spill in the Gulf. Now it is back.

Mr Trump thinks oil and gas are central to world politics and economic development. He sees a plentiful supply of cheap and easily accessible energy as crucial to higher living standards and faster economic growth. He sees fossil fuels as being superior to renewable electricity which he condemns as dear and impractical. With his own dramatic hyperbole, he says of the Democrats: “They want windmills all over the place that ruin our fields, kill our birds and are very unreliable and are the most expensive energy ever developed. We want oil, gasoline, natural gas because it’s cheaper, better and more powerful”.

His economic policy would be in part driven by a transformed regulatory and tax regime that promoted more US oil and gas production. He wants to increase US exports and use the extra oil and gas revenues to cut the state debt and give him scope for his spending and tax-cutting priorities. As he remarked with some characteristic disregard for the numbers “We were on our way to energy dominance (when he left office). We would have been paying off our debt because energy is big numbers”.

He is no lover of the road to net zero. He would withdraw the USA from the Paris Climate Change Treaty and subsequent commitments from the various COP meetings that have taken place since. He has condemned the green deal programme, castigating Senate approval of “ five and a half trillion dollars for Green New Deal garbage”. He would reverse regulatory moves to electric vehicles and some regulations on light bulbs, gas stoves, dishwashers, and shower heads. He wants the lowest cost energy and electricity of any country in the world.

Current policy – led by a Democrat president – is to engage the USA more fully with the climate change conferences, put in regulations, taxes and requirements to start hitting US targets for carbon reduction, and make a big further investment in renewable electricity and electric vehicles, appliances and industrial processes. President Biden promised to end new oil and gas leases on federal lands but has lost court cases trying to do this. More recently he approved three drilling sites within the Alaskan reserve for the controversial Willow project. This allows Conoco to drill up to 199 wells to produce oil

Environmentalists have been shocked by this decision which they have fought given the sensitivity and wild nature of the federal lands and the reversal of climate policy. The president points out he blocked two of the five drilling sites Conoco wanted, and has placed further limitations on oil and gas in other areas of wilderness in Alaska.

The US oil and gas industry has protested at regulations, taxes and controls President Biden has introduced. Recently they argued against the continuing limitations on new drilling offshore, where they report a 30% fall in wells under Biden compared to Trump.

The environmentalist side of the argument has also not been impressed. They claim that in his first two years President Biden approved 6,430 drilling permits for the country as a whole compared to 6,172 in President Trump’s first two years. The overall output of oil and gas from the USA did take a major step under Trump’s programme of encouragement, but the totals are higher today than in Donald Trump’s last year in office. In December 2016 gas output was at 2.7 million million cubic feet. Under Trump three years later it reached a peak of 3.622 million million, a rise of plus 34%. In December 2022 it had gone up a bit more under Biden and was at 3.754 million million. President Trump expanded oil production from 8.8m barrels a day in December 2016 to a peak of 12.98 m barrels a day in December 2019, a rise of 47%. It has stayed around this level under President Biden.

President Biden is attacked by some Democrats for not doing more to rein in the oil and gas industry. He too has used words that do not reflect the numbers. He seemed to relent a bit towards the industry when high oil and gas prices translated into high gasoline prices for motorists and helping push up inflation. His words remained hostile to fossil fuels, but his actions reflected the reality of court judgements and the pressures to do something more to get oil and gas prices down.

A perceived ambivalence of Biden policy towards oil and gas means a Trump Presidency would be a less dramatic change than Mr Trump promises. We would notice a dramatic change in rhetoric and a clear break with net zero as a main guide to policy. A second term President Trump would step up the grant of exploration and production permits onshore and offshore. He would generate more growth in US oil and gas output as he did last time, though the percentage gain will probably be lower as the base is so much higher. This would boost tax revenues, create more well-paid jobs and boost the trade balance. It would take the USA further away from the climate targets of the UN conferences and would have substantial implications for world geopolitics which we will analyse in a later blog. A Trump second term would be good news for oil and gas investments and bad news for renewables.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Trump against Biden means "Drill baby drill" fighting the road to net zero

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