Trump has promised to “drill, baby, drill” and undo the Biden administration’s green subsidies. How will his policies affect American energy?

From The Epoch Times. “We will frack, frack, frack, and drill, baby, drill,” former President Donald Trump said in an Oct. 18 speech at a Detroit event.

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Now that Trump has secured a second presidential term, market watchers are examining his potential effect on the energy sector, from crude oil and natural gas to solar and wind.

Since declaring his 2024 candidacy, Trump has pledged more oil and gas production, regulatory overhaul, and scaling back the current administration’s green energy subsidies.

The Trump Effect on Oil and Gas

Over the past week, U.S. crude oil prices and natural gas prices have been bumpy.

At the market close on Election Day, Nov. 5, a barrel of West Texas Intermediate (WTI) crude oil, for example, traded at about $72 on the New York Mercantile Exchange. Nearly a week later, oil prices have slumped below $69. …

Phil Flynn, an energy strategist at The PRICE Futures Group, says the mixed performances have been fueled by the near-term “psychological impact” of “drill, baby, drill.” …

In 2018, the United States became a net oil exporter for the first time in 75 years as the industry produced record amounts of crude, topping 13.1 million barrels per day (bpd) in March 2020. Weekly crude production struggled to rebound in the years following the pandemic. It was in October 2023 that U.S. production climbed above pre-crisis levels, hitting an all-time high of 13.5 million bpd last month.

Estimates for how much extra oil and natural gas will be produced vary.

Flynn estimates that the U.S. could produce an extra 1 million to 2 million barrels bpd in the coming years.

The United States “will retain its role as U.S. oil production grows around 300,000–500,000 barrels per day,” Rob Thummel, the senior portfolio manager at Tortoise Capital Advisors, said in an email to The Epoch Times.” In addition, Thummel projects that natural gas production growth could increase by approximately 30 billion cubic feet per day by 2030. …

Experts say regulatory uncertainty has been a major source of consternation for the oil and natural gas sector.

In April, for example, the Biden administration approved a rule that would increase the minimum oil and gas lease bond drillers must pay to $150,000 from $10,000. The announcement made it far more expensive for fossil fuel companies to extract oil, gas, and coal from federal lands. …

Trump and his team have promised to take action within the Interior Department and other environmental agencies to dismantle energy and environmental regulations. Indeed, boosting fossil fuel production activity on federal lands and waters has been at the core of Trump’s proposed energy policies. …

But while the president-elect’s administration will adopt friendlier industry policies that could facilitate an acceleration in output, market experts say that prices might be the true driver of production volumes over the next few years.

Based on surveys of producers by the Federal Reserve banks of Dallas and Kansas, oil prices need around $64 per barrel to ensure drilling is profitable. …

Seeing Green From All of the Above

In the aftermath of Election Day results, a plethora of renewable-energy stocks tanked, from First Solar (negative 14 percent) to Sunrun (negative 18 percent.

The sell-off has been fueled by growing expectations that Trump could eliminate or curtail various government subsidies in the Inflation Reduction Act.

According to the International Energy Agency (IEA), domestic renewable energy expansion has been projected to double from 2024 to 2030, “propelled by generous Inflation Reduction Act (IRA) stimulus in the form of tax incentives.” …

While there is concern that the future of the renewables sector might be up in the air in a second Trump term, using a “scalpel” rather than a “sledgehammer” to the massive number of subsidies might be more realistic, says House Speaker Mike Johnson (R-La.) …

“You’ve got to use a scalpel and not a sledgehammer, because there’s a few provisions in there that have helped overall,” Johnson said in an interview with CNBC in September.

A chorus of Republican lawmakers penned a letter to Johnson, urging the GOP leadership to preserve some provisions in the bill. …

Despite the president-elect’s antagonistic views toward green energy, Adam Ennamli, the chief risk officer at General Bank of Canada, does not believe a Trump presidency “would signify the end of the renewable energy sector.”

“The industry has matured significantly and is now largely driven by economic factors rather than solely by federal policy,” Ennamli told The Epoch Times. “While Trump’s administration may roll back certain regulations and subsidies, the fundamental market dynamics favoring renewables are robust.” …

Trump has pledged to cancel all unspent funds from the Inflation Reduction Act. However, even if Trump were to roll back many IRA tax credits, grants, and other subsidies, much of the funding has already been deployed.

So far, the administration has awarded $90 billion in grants to climate and clean energy projects, accounting for about three-quarters of the bill’s grant funding. …

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(Excerpt from The Epoch Times. Photo Credit: Zbynek Burival on Unsplash)