The Fuse

Trump Lays Out His Energy Philosophy – ‘Open It Up’

by Matt Piotrowski | May 27, 2016

On the day Donald Trump clinched the number of delegates needed to secure the party’s nomination, the Republican frontrunner gave a rousing speech focused on energy in the heart of shale country. The main arguments of Trump’s energy policy were calling for energy independence and lessening federal regulations in order to stimulate supply and create jobs.

“I want to be energy independent,” said Trump at a press conference in Bismarck, ND ahead of the speech. “We are sitting on energy like no one would believe.”

Trump threw his full support behind fracking and said that if the U.S. were to ban it, the country would be “back into the Middle East begging for oil again.”

He called for government to “get out of the way” and to “open it up,” referring to regulations that keep certain areas off limits to drilling. Before an audience in Williston, North Dakota that included oil executive Harold Hamm, the CEO of shale producer Continental Resources, Trump said that he is in favor of building the Keystone XL pipeline, which President Obama rejected on environmental grounds, and that three-quarters of federal regulations are detrimental to the country. He also voiced his unconditional support for hydraulic fracturing, or fracking.

When asked at the press conference about fracking, he highlighted that Democratic candidates Bernie Sanders and Hillary Clinton are for banning or increasing regulations, respectively, and fully noted his contrasts with the two. He threw his full support behind fracking and said that if the U.S. were to ban it, the country would be “back into the Middle East begging for oil again.”

Shale oil supply grew by more than 4 million barrels per day from 2010 to 2015, but has fallen back by almost 1 mbd as a result of low prices. Even with the massive growth in shale, the country still imports almost 8 mbd of crude, or close to 50 percent of refinery demand. Just under 3 mbd of imports comes from OPEC members.

Although the industry has criticized the Obama administration for its heavy-handed regulations regarding drilling on federal lands, the shale boom took place on private acreage and has had limited federal oversight. The biggest regulatory fight regarding shale is the Environmental Protection Agency’s (EPA) push for tighter restrictions on methane emissions.

Trump repeatedly boasted of the country’s energy potential, saying his policies would allow the U.S. to “make so much money” from energy that it would help pay down the national debt, sell energy “to other places,” and allow for tax cuts.

In his speech, he touted North Dakota as part of a new energy “revolution” in the U.S., pointing to the growth of oil and gas production and the sharp drop in crude imports. Trump argued that these trends have occurred in spite of “bureaucratic and political barriers” put up by the Obama administration, saying that Obama’s policies have brought about an “onslaught of regulations” that have “weakened our security.”

Trump was particularly critical of the Obama administration’s regulation of the coal industry. In a press conference that dealt with a wide range of issues, he argued federal regulations have had more of a negative impact on coal companies than the growth of cheap natural gas, although economists generally point out that the low gas prices because of the shale boom have been the bigger factor.

Trump, a real estate mogul and former reality TV star, highlighted fines on North Dakota firms, limiting drilling on federal lands, and calls for a $10 per barrel tax on oil as criticisms of Obama’a energy policy. With a Trump administration, he said he’d accomplish “complete energy independence” by encouraging fracking and opening areas to drilling that are currently off limits, such as those in Alaska and on the Atlantic Coast. He estimates that total untapped oil and gas on federal lands is $50 trillion, and he hyped the job creation potential of opening up more areas.

Trump singled out fighting against producers that are hostile to U.S. interests, mentioning the OPEC cartel by name. By achieving so-called energy independence, which has been an elusive presidential goal since Richard Nixon held office, “Foes and oil cartels can no longer use energy as a weapon,” Trump said.  “We will become and stay totally independent of any need to import energy from the OPEC cartel,” adding, “We don’t deal with them. We’ll handle them just fine.”

Kevin Cramer, Republican representative of North Dakota who introduced Trump at the event in Bismarck, has sponsored a bill to create a commission to investigate OPEC’s impact on the global oil markets and the U.S. economy.

“We should be prepared to make sure that everyone, to the degree that we can, is playing by the same set of rules, or at least not manipulating the rules,” Cramer has said.

In his speech, Trump argued that while President Obama lifted sanctions on Iran, he put “economic sanctions on the U.S.” by pursuing regulations on the energy industry.

Despite expectations that Trump would use this speech to bash OPEC countries, they were not his main focus. In fact, not all of his language toward OPEC countries was hostile, noting that his administration would work with Gulf allies to “knock-out” terrorism.

The speech was believed to be an effort to try to convince the Republican Party that he has a coherent message in energy, as his proposals have been seen as lacking clarity and credibility. Energy has not been a major focal point so far in the 2016 election, in large part because gasoline and electricity prices have been so low.

While most of his speech favored conservative ideals, he did say that he wants to use revenues from oil and gas drilling to rebuild roads, schools, bridges, and other infrastructure. He also said the he favors pursuing all forms of energy, including renewables and nuclear.