During his campaign and since taking office, President Donald Trump often repeated his desire to bring back the same “drill, baby, drill” oil and gas agenda that characterized his first term in office.
But that term began 8 long years ago and much has changed in the domestic oil business since then. Current market realities are likely to mitigate the industry’s response to Trump’s easing of the Biden administration’s efforts to restrict its activities.
Trump’s second term begins as the upstream segment of the industry has enjoyed three years of strong profitability and overall production growth by employing a strategy of capital discipline, technology deployment and the capture of economies of scale in the nation’s big shale play areas. Companies like, say, ExxonMobil and Oxy and their peers are unlikely to respond to the easing of government regulations by discarding these strategies that have brought such financial success in favor of moving into a new drilling boom.
This bias in favor of maintenance of the status quo is especially likely given that the big shale plays in the Permian Basin, Eagle Ford Shale, Bakken Shale, Haynesville and the Marcellus/Utica region have all advanced into the long-term development phases of the natural life cycle typical of every oil and gas resource play over the past 175 years. Absent the discovery of major new shale or other types of oil-or-natural gas-bearing formations, a new drilling boom seems quite unlikely under any circumstances.
One market factor that could result in a somewhat higher active rig count would be a sudden rise in crude oil prices, if it appears likely to last for a long period of time. Companies like Exxon, Chevron, Oxy and Diamondback Energy certainly have the capability to quickly activate a significant number of additional rigs to take advantage of long-term higher prices.
But crude prices are set on a global market, and that market has appeared over-supplied in recent months with little reason to believe the supply/demand equation will change significantly in the near future. Indeed, the OPEC+ cartel has been forced to postpone planned production increases several times over the past 12 months as an over-supplied market has caused prices to hover well below the group’s target price.
But it is wrong to think the domestic oil industry will not respond in any way to Trump’s efforts to remove Biden’s artificial roadblocks to energy progress. Trump’s efforts to speed up permitting for energy projects of all kinds are likely to result in a significant build-out of much-needed new natural gas pipeline capacity, natural gas power generation plants and new LNG export terminals and supporting infrastructure.
Instead of another four years of “drill, baby, drill,” the Trump efforts to speed energy development seem certain to result in four years of a “build, baby, build” boom.
Indeed, the industry is already responding in a big way in the LNG export sector of the business. During Trump’s first week in office, LNG exporter Venture Global launched what is the largest energy IPO by value in U.S. history, going public with a total market cap of $65 billion.
With five separate export projects currently in various stages of development, all in South Louisiana, Venture Global plans to become a major player in one of America’s major growth industries in the coming years. Trump’s Day 1 reversal of Biden’s senseless permitting pause on LNG infrastructure is likely to kick off a number of additional LNG projects by other operators.
The Trump effect took hold even before he took office when the Alaska Gasline Development Corporation entered into an exclusive agreement in early January with developer Glenfarne to advance the $44 billion Alaska LNG project. The aim is to start to deliver gas in 2031, with LNG exports following shortly thereafter.
America’s oil and gas industry has demonstrated it can consistently grow overall production to new records even with a falling rig count in recent years. Now it must grow its related infrastructure to account for the rising production.
That’s why Trump’s “drill, baby, drill” mantra is likely to transform into “build, baby, build” in the months and years to come.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Shares of big Danish offshore wind developer Orsted dropped by 17% Monday, the same day President Donald Trump took the oath of office to become the 47th president of the United States. The two events are not merely coincidental with one another.
To be sure, Orsted’s loss of market cap was caused by several factors, including both the general slowing of the offshore wind business, and Orsted’s own announcement that it will incur a $1.69 billion impairment charge related to its Sunrise Wind project off the coast of New York. Company CEO Mads Nipper attributed the charge to delays and cost increases and said the project completion date is now delayed to the second half of 2027.
But there can be little doubt that the raft of energy-related executive orders signed by Trump also contributed to the drop in Orsted’s stock price. As part of a Day 1 agenda consisting of a reported 196 executive orders, the new president took dead aim at reversing the Biden Green New Deal agenda in general, with a special focus on wind power projects on federal lands and waters.
In addition to general orders declaring a national energy emergency and pulling the United States out of the Paris Climate Accords (for a second time), Trump signed a separate order titled, “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects.” That long-winded title (pardon the pun) is quite descriptive of what the order is designed to accomplish.
Section 1 of this order withdraws “from disposition for wind energy leasing all areas within the Offshore Continental Shelf (OCS) as defined in section 2 of the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1331.” Somewhat ironically, this is the same OCSLA cited in early January by former President Joe Biden when he set 625 million acres of federal offshore waters off limits to oil and gas leasing and drilling into perpetuity.
As with Biden’s LNG permitting pause, the fourth paragraph of Section 1 in Trump’s order states that “Nothing in this withdrawal affects rights under existing leases in the withdrawn areas.” However, the same paragraph goes on to subject those existing leases to review by the secretary of the Interior, who is charged with conducting “a comprehensive review of the ecological, economic, and environmental necessity of terminating or amending any existing wind energy leases, identifying any legal bases for such removal, and submit a report with recommendations to the President, through the Assistant to the President for Economic Policy.”
Observant readers will know that the parameters of this order as it relates to offshore wind are essentially the same as a proposal I suggested in a previous piece here on Jan. 1. So, obviously, it receives the Blackmon Seal of Approval.
But we should also note that Trump goes even further, extending this freeze to onshore wind projects as well. While the rationale for the freeze in offshore leasing and permitting cites factors unique to the offshore like harm to marine mammals, ocean currents and the marine fishing industry, the rationale supporting the onshore freeze cites “environmental impact and cost to surrounding communities of defunct and idle windmills and deliver a report to the President, through the Assistant to the President for Economic Policy, with their findings and recommended authorities to require the removal of such windmills.”
This gets at concerns long held by me and many others that neither the federal government nor any state government has seen fit to require the proper, complete tear down and safe disposal of these massive wind turbines, blades, towers and foundations once they outlive their useful lives. In most jurisdictions, wind operators are free to just abandon the projects and leave the equipment to dilapidate and rot.
The dirty secret of the wind industry, whether onshore or offshore, is that it is not sustainable without consistent new injections of more and more subsidies, along with the tacit refusal by governments to properly regulate its operations. Trump and his team understand this reality and should be applauded for taking real action to address it.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Just a few years ago, ESG was all the rage in the banking and investing community as globalist governments in the western world focused on a failing attempt to subsidize an energy transition into reality. The strategy was to try to strangle fossil fuel industries by denying them funding for major projects, with major ESG-focused institutional investors like BlackRock and State Street, and big banks like J.P. Morgan and Goldman Sachs leveraging their control of trillions of dollars in capital to lead the cause.
But a funny thing happened on the way to a green Nirvana: It turned out that the chosen rent-seeking industries — wind, solar and electric vehicles — are not the nifty plug-and-play solutions they had been cracked up to be.
Even worse, the advancement of new technologies and increased mining of cryptocurrencies created enormous new demand for electricity, resulting in heavy new demand for finding new sources of fossil fuels to keep the grid running and people moving around in reliable cars.
In other words, reality butted into the green narrative, collapsing the foundations of the ESG movement. The laws of physics, thermodynamics and unanticipated consequences remain laws, not mere suggestions.
Making matters worse for the ESG giants, Texas and other states passed laws disallowing any of these firms who use ESG principles to discriminate against their important oil, gas and coal industries from investing in massive state-governed funds. BlackRock and others were hit with sanctions by Texas in 2023. More recently, Texas and 10 other states sued Blackrock and other big investment houses for allegedly violating anti-trust laws.
As the foundations of the ESG movement collapse, so are some of the institutions that sprang up around it. The United Nations created one such institution, the “Net Zero Asset Managers Initiative,” whose participants maintain pledges to reach net-zero emissions by 2050 and adhere to detailed plans to reach that goal.
The problem with that is there is now a growing consensus that a) the forced march to a green energy transition isn’t working and worse, that it can’t work, and b) the chances of achieving the goal of net-zero by 2050 are basically net zero. There is also a rising consensus among energy companies of a pressing need to prioritize matters of energy security over nebulous emissions reduction goals that most often constitute poor deployments of capital. Even as the Biden administration has ramped up regulations and subsidies to try to force its transition, big players like ExxonMobil, Chevron, BP, and Shell have all redirected larger percentages of their capital budgets away from investments in carbon reduction projects back into their core oil-and-gas businesses.
The result of this confluence of factors and events has been a recent rush by big U.S. banks and investment houses away from this UN-run alliance. In just the last two weeks, the parade away from net zero was led by major banks like Goldman Sachs, Morgan Stanley, Citigroup, Bank of America, Wells Fargo, and, most recently, JP Morgan. On Thursday, the New York Post reported that both BlackRock and State Street, a pair of investment firms who control trillions of investor dollars (BlackRock alone controls more than $10 trillion) are on the brink of joining the flood away from this increasingly toxic philosophy.
In June, 2023, BlackRock CEO Larry Fink made big news when told an audience at the Aspen Ideas Festival in Aspen, Colorado that he is “ashamed of being part of this [ESG] conversation.” He almost immediately backed away from that comment, restating his dedication to what he called “conscientious capitalism.” The takeaway for most observers was that Fink might stop using the term ESG in his internal and external communications but would keep right on engaging in his discriminatory practices while using a different narrative to talk about it.
But this week’s news about BlackRock and the other big firms feels different. Much has taken place in the energy space over the last 18 months, none of it positive for the energy transition or the net-zero fantasy. Perhaps all these big banks and investment funds are awakening to the reality that it will take far more than devising a new way of talking about the same old nonsense concepts to repair the damage that has already been done to the world’s energy system.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
President-elect Donald Trump has a big job ahead of him in restoring common sense and sanity to federal energy policy when he takes office on January 20. The last four years in this realm can more accurately be characterized as a series of ill-considered, irrational scams than as any sort of coherent, productive set of policies. It has been four years of bad policies — largely based on crass crony capitalism principles — that has done severe damage to America’s level of energy security.
There is no doubt that cleaning up this mess left behind by President Joe Biden and his appointees will take the full four years of Trump’s second term. But the new president will be able to take some fast actions to jump-start the process as part of his first 100 days agenda.
With respect, here is a list of 10 quick common-sense actions Trump can take to begin to restore America’s energy security:
1 — Rescind Biden’s ridiculous permitting “pause” on LNG export infrastructure. Of all the Biden energy policy scams, this was perhaps the most heinous and unjustified of all. Terminate it immediately and get this American growth industry back on track.
2 — Terminate U.S. participation in the Paris Climate Agreement and in any future annual COP conferences sponsored by the United Nations. Halt the spending of federal dollars related to any and all goals and commitments related to either of these wasteful processes.
3 — Terminate the office of Senior Advisor to the President for International Climate Policy, aka “the Climate Envoy,” currently occupied by John Podesta and eliminate its budget.
4 — Turnabout being fair play, Trump should invoke a “pause” of his own related to permits and subsidies going to Biden’s pet offshore wind boondoggle. The pause would be justified by the need to conduct a truly thorough study on the potential impacts of those massive developments on marine mammals, seabirds, and the commercial fishing industry. Invoke the “precautionary principle” that has been ignored by Biden regulators related to these costly and possibly deadly projects.
5 — Order the Interior Department to immediately and aggressively restart the moribund oil-and-gas leasing program on federal lands and waters. Direct the Interior Department Inspector General to investigate the Biden-era manipulations of these programs for potential criminal violations.
6 — Form an interagency task force to recommend ways the executive branch of government can act to streamline permitting processes for energy projects that do not require congressional action. Congress has proven several times now that it is incapable of passing legislation in this arena.
7 — Place an immediate hold on all green energy subsidies pending a full compliance review. This should include any and all subsidy programs that were part of the IRA or the 2021 Infrastructure law. This review should also include suggested reforms to qualification requirements for these subsidy programs in light of the high percentage of bankruptcy filings by unsustainable companies that have benefited from these subsidies.
8 — In light of the Supreme Court’s recent recission of the Chevron Deference, order the Environmental Protection Agency to review the rationale for regulating atmospheric carbon dioxide, aka “plant food,” as a pollutant under the provisions of the Clean Air Act.
9 — Order an interagency review of the U.S. power grid and transmission infrastructure as they relate to national security concerns. Include a special focus on the current, growing trend of major tech firms locking up power generation assets for their own specific needs (AI, data centers, etc.) which might deny generation capacity that would otherwise be dedicated to the public grid.
10 — In light of recent reports of Biden regulators steering billions of dollars of IRA and other green energy funds to NGOs to provide funding for anti-fossil fuel propaganda, lawfare, and other abuses of the legal system, order an immediate freeze on all such spending pending a formal review.
In reality, this list could consist of hundreds of high priority items for the new administration to undertake. Such is the level of damage that has been wrought on American energy security by the outgoing administration.
But executing these ten items in the early days of his second term would represent a good start and place the country on a path to recovery. We wish Trump and his appointees the best of luck in restoring U.S. energy security.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
Among the many promises and commitments that he has made during his ongoing transition period, President-elect Donald Trump has pledged to pull U.S. support for the World Health Organization and cancel its commitments related to the 2015 Paris Climate Agreement. If a new report issued this week by the Senate Committee on Energy and Natural Resources and incoming chairman Republican Wyoming Sen. John Barrasso, is any guide, Trump perhaps should add U.S. support for the International Energy Agency to his growing list of cancellation opportunities.
“French President Macron’s observation that IEA has become the ‘armed wing for implementing the Paris Agreement’ is regrettably true,” said the report. “With the many serious energy security challenges facing the world, however, IEA should not be a partisan cheerleader. What the world needs from IEA—and what it is not receiving now—is sober and unbiased analyses and projections that educate and inform policymakers and investors. IEA needs to remember why it was established and return to its energy security mission.”
The IEA was established in 1974 in response to the first Arab Oil Embargo which resulted in dramatically higher prices for crude oil and gasoline at the pump. Originally supported by 31 member countries including the United States, the agency’s mission was to provide accurate information related to global oil supply and demand which subscribing countries could use to help form effective energy policies. That original mission held firm for decades, during which the IEA was widely considered a leading source of real, unbiased energy information.
But politics tends to corrupt everything it touches, and the IEA has unfortunately proved to be no exception to that rule. As the politics surrounding climate alarmism rose to new highs following the signing of the Paris Climate Agreement, the agency came under increasing pressure to radically alter its mission from that of a provider of real information worthy of trust to more of an activist posture.
In 2020, the report notes, this led to a shift in the IEA’s mission statement and to a new design to its modeling processes that form the basis for its annual World Energy Outlook. As its modeling base case, the agency abandoned its longstanding Current Policies Scenario, which Barrasso’s report describes as “essentially a ‘business as usual’ reference case,” in favor of a more aggressive Stated Policies Scenario.
Barrasso’s report describes this new scenario as “a hypothetical outlook based on unimplemented policies and grounded in unrealistically optimistic assumptions about the pace and scale of the transformation, especially concerning the adoption of electric vehicles by consumers.” It is an approach intentionally designed to introduce bias into the modeling process, and thus into the IEA policy recommendations for which the modeling process serves as the foundation.
This inevitable bias had an immediate and very noticeable effect. In a report published by the IEA in May 2021 Executive Director Fatih Birol laughably stated that “there will not be a need for new investments in oil and gas fields” and urged oil and gas producers to halt investments in exploration and development of new oil reserves. But that was before oil prices exploded as global demand exceeded supply during the recovery from the COVID pandemic, and by August Birol had completely reversed himself, joining President Joe Biden in a desperate call for more oil drilling to help resolve the situation.
Obviously, this sort of flip-floppery does severe damage to the agency’s already crumbling credibility as well as to the justification for governments to continue pouring millions of dollars into its operations each year. Barrasso’s report correctly notes that the IEA’s “reputation has lost its luster.”
Barrasso’s report is blunt about the kinds of reforms he would like to see at the IEA, urging Birol to abandon its advocacy posturing against investments in oil, natural gas, and coal, and to “once again produce for its World Energy Outlooka real unbiased, policy-neutral ‘business as usual’ reference case of the kind the Energy Information Administration produces.”
The Wyoming senator stops short of calling for the U.S. defunding of the IEA, but the agency’s currency is information. If that currency has lost its value, then perhaps Trump should consider a more aggressive approach.
David Blackmon is a contributor to The Daily Caller News Foundation, an energy writer, and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.