We all remember Ken Bone, the bespectacled, chubby guy in the red sweater who challenged Hillary Clinton and Donald Trump during the second presidential debate. But beyond his amusing appearance, he actually asked a question of substance:
“What steps will your energy policy take to meet our energy needs while at the same time remaining environmentally friendly and minimizing job layoffs?”
One of the main processes championed by US president Barack Obama was increasing environmental regulations in the energy industry. These steps have put some tough constraints on the fracking industry and coal producers. He has also promoted the usage of green energy, at the expense of the more traditional sources of oil, gas and coal.
Moreover, Obama’s approach has also influenced some energy infrastructure projects. The best example would be the problem that the North Dakota pipeline project faces, due to its crossing of the Missouri River and the Standing Rock Indian Reservation.
Hillary Clinton pledged to continue the policy of the incumbent president, and even stated in May that she is going to “put a lot of coal miners and coal companies out of business”.
On the other side of the aisle, the Republican candidate has stated several times that he wants to champion the rights of energy sector laborers, such as the coal miners. “The miners in West Virginia and Pennsylvania, which was so great to me last week and Ohio and all over, they’re going to start to work again, believe me,” said Trump earlier this year.
On a more practical note, Trump has vowed to repeal some of Obama’s environmental legislation, such as the Clean Power Plan, limiting the energy sector. We can add to that Trumps’ view of the US EPA (Environmental Protection Agency).
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“What they do is a disgrace,” he said, and even hinted he will close the organization altogether.
Not to mention his opinion on global warming. “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive”, Trump tweeted in November 2012. Later, he also offered that the US should pull out of the Paris climate deal.
Now that Trump has become the president-elect, against all odds, the energy sector is anxious to see his actions in this regard. The Wall Street Journal recently published an artile regarding the expectations that energy companies (and especially coal producers) have from his upcoming term.
For the short term, energy sector shares have rallied and are expected to perform better as January 20th approaches.
In the long term, I believe that for American entrepreneurs and workers, this is some good news. The environmental regulations went too far and preferred the trees to the people. There are ways to lessen harm to the environment in more moderate ways.
The development of the American fracking industry has allowed the US to become one of worlds’ top oil producers and also to be self-sufficient. But it also sparked an oil war between the US and the traditional oil producers (such as Russia and Saudi Arabia).
But this industry has become a victim of its own success. Fracking is believed to be one of the main causes for the drop in the oil prices in the last two years. The low prices (along with the regulatory costs and constraints) has put many frackers out of business.
But at the same time, it’s important to state that while backing off from some constraining regulations might mean more jobs in the energy sector, it could also mean higher volatility for oil and gas prices.
On the one hand, increasing the demand for oil inside the US could send black gold prices upwards. On the other hand, unleashing the American fracking industry, and the re-legitimization of coal production, may reignite the Cross-Atlantic oil wars and drive oil prices to the bottom.