Energy Sector Trumpets Surprise Election Result

While concrete details have yet to be spelled out, President-elect Donald Trump’s statements during his successful election campaign indicate he would likely adopt policies that attempt to expand fossil fuel production, ease regulations on the energy industry, and roll back President Obama’s environmental and climate policies, comments S&P Global Platts. The consultancy adds that Trump has indicated he will let markets decide what lands to drill and dismantle the Environmental Protection Agency’s ability to over-regulate industry. Further, the incoming president will enjoy a Republican majority in both the House of Representatives and Senate upon his incumbency.

Trump’s surprise upset over his widely favored Democratic rival, Hillary Clinton, elicited numerous positive comments from the energy sector. The American Petroleum Institute (API) asserted, “American voters have spoken. Energy won the 2016 election.” In a conference call with reporters, API president and CEO Jack Gerard revealed the results of a voter poll conducted on election night. “Eighty percent of voters support increased development of U.S. oil and natural gas resources, including 71% of Democrats, 94% of Republicans, and 76% of independents,” said Gerard. “Voters want a Congress and administration that works for their interests. And just as there is bipartisan voter support for energy priorities, there is an opportunity for Republicans and Democrats in Congress to work toward pro-development policies that provide economic growth, job creation, and energy security.”

He added that with the oil and natural gas industry facing 145 regulations or other policy-setting activities that could discourage production, preventing regulatory overreach should be a top priority. A combination of industry innovation, market forces, and existing standards have proven effective for keeping hydraulic fracturing safe while reducing emissions of ozone, methane, and carbon, he said. He commented that the U.S. leads the world in the reduction of carbon emissions, with clean-burning natural gas driving emissions in the power sector to 25-year lows.

An editorial in the Oil & Gas Journal under the headline “Political Climate Change” heralded that “Trump’s victory…eviscerates Barack Obama’s energy legacy.” The respected energy publication adjoined that the current president “famously claimed to be pursuing an ‘all of the above’ energy policy. In reality, his administration sought to replace fossil energy with costlier alternatives, all in service to worst-case scenarios of climate change. Trump…promises to make oil and gas policy practical and economically fruitful again.”

Amplifying approval of the Trump victory, American Energy Alliance (AEA) president Thomas Pyle, whose organization endorsed the Republican challenger, said, “This election showed that the American people are tired of their interests taking a back seat to special interests in Washington. President-elect Trump’s victory presents an opportunity to reset the harmful energy policies of the last generation. He has laid out an energy plan that puts the needs of American families and workers first.”

In the lead-up to the presidential election, AEA contrasted the stated policy positions of the Democratic and Republican contenders on energy scorecards. The association maintained that a review of Clinton’s record and statements “makes it clear that she would advocate big government policies designed to significantly increase the cost of energy in every aspect of people’s lives.” Also observed was her indication she would defend and expand upon Obama administration energy priorities and regulations. “From issue to issue, Clinton has aligned herself with the radical interests of the environmental left and abandoned the interests of the American people,” AEA charged. “Her administration would do significant damage to America’s energy future.”

Conversely, the association praised Trump for putting forth a plan that would move the country forward “by opening up more federal lands and waters for energy exploration, unwinding the Obama administration’s harmful regulations, and subjecting the Paris Agreement to the scrutiny it deserves.” Noted was that Trump opposes a carbon tax, the Obama administration’s use of the social cost of carbon, and stresses the need to eventually end all energy subsidies. “After reviewing Donald Trump’s energy plan and past statements, AEA believes he would be a strong advocate for American families if elected president,” the advocacy organization concluded.

The National Propane Gas Association (NPGA), while more circumspect, also provided comments on the surprise election result, initially in its Nov. 10 NPGA Reports newsletter and later in response to written questions from BPN. Observed was that, “While most pollsters and political commentators did not give Donald Trump a chance to win, on Tuesday night he pulled off an historic election upset and won the presidency. Importantly for President-elect Trump, Republicans maintained majorities in both houses of Congress to give his party full control of government for the next two years.”

The association said the stunning vote tally left its staff to speculate about what a Trump presidency would look like and how it will affect the propane industry. NPGA said among the big-ticket items Trump and Congress will likely pursue next year is a major overhaul of the existing tax code. “Congressional Republicans have been eagerly eyeing tax reform for a number of years. Now with full control and an allied president, Republicans will look to move quickly on a tax reform initiative that is expected to include a simplification of the tax code with reduced rates.”

The association added that the energy bill currently under consideration by Congress is no longer viable in the lame duck session. That bill was characterized as already on shaky ground, and with Republicans taking the White House the GOP will view next year as a better opportunity for its energy priorities, NPGA said. On that point, Republicans in Congress may seek an energy reform bill once President-elect Trump takes office. Further, Trump has discussed a broad infrastructure development plan, which could generate bipartisan support and may move quickly.

From a regulatory perspective, NPGA said controversial energy-related initiatives championed by President Obama “are on the chopping block. The Clean Power Plan, the Paris Agreement, and other executive actions opposed by President-elect Trump and Republicans are not going to survive in the new administration,” but it is unclear at this stage in what direction pending rulemakings will proceed next year. “At this point, it isn’t entirely clear what a new administration is going to mean for the energy industry,” the association said. “Early indications suggest that there could be a lessening of the regulatory burden and that almost everything is back on the table for negotiation. We anticipate that tax reform will be one of the largest agenda items for the new Congress and administration, and we will work to make sure propane is well represented in that conversation.”

On whether it viewed working with the incoming Trump administration as more favorable to working with a Clinton-led team, one that presumably would have continued or expanded Obama administration priorities, NPGA underlined that it was “fortunate to have great relationships with many members of Congress on both sides of the aisle. It is important to underscore that the industry has enjoyed good relationships with both parties in Congress and the White House. What supports our access is not party based, it’s that we represent a great fuel that can help everyone meet their goals—on both sides of the aisle.”

As well, there are new members of Congress NPGA looks forward to meeting and educating on propane. A new administration and newly appointed officials open opportunities for industry advocacy. “The clear message in Trump’s election,” NPGA said, “is that Americans are ready for a change. President-elect Trump’s platform was largely based on a departure from the last eight years. However, we do not know yet what that will mean in terms of specific policies.” And with any new president, “there’s going to be momentum to move policy quickly. Conventional wisdom would suggest that with the White House and Congress aligned, important legislation can move in the first 100 days. However, there is a renewed call for both parties to work together, which could mean more time for collaboration to take place.”

NPGA pointed to one significant realignment in the House of Representatives that could affect propane industry objectives. There will be a new Energy and Commerce Committee chairman. Rep. Fred Upton (R-Mich.) has held the post since 2011 but must step down due to party-imposed term limits. Rep. Joe Barton (R-Texas), whose conservative agenda includes curtailing the Environmental Protection Agency, has made a pitch for the chairmanship. Barton previously served as committee chairman from 2004 to 2007, and he currently serves as chairman emeritus for the committee. The association notes that the Energy and Commerce Committee has expansive jurisdiction over many industry priorities.

Regarding a possible changing regulatory environment, NPGA said it is always hopeful for reduced burdens, but nothing is guaranteed. New appointments are forthcoming at agencies that regulate the propane industry, and every cabinet secretary will be appointed by the president-elect and confirmed by the Senate. “At NPGA we are most interested in the appointments at the Department of Transportation, Department of Energy, and Occupational Safety and Health Administration because their regulatory agenda for the next six months contains issues of great importance to our industry,” the association said.

Outlining that it is too soon to gauge the new administration, several ongoing rulemakings are key priorities because of their potential impact on the industry. “There are pending energy efficiency standards at the Department of Energy, including a rule on hearth products, and another on residential furnaces that could lead to fuel switching,” NPGA said. “We are also interested in the future of the crane and derricks regulation at the Occupational Safety and Health Administration, and we will continue to engage the Department of Transportation on regulations that facilitate the safe and efficient delivery of propane.”

Upstream of the propane industry, the National Ocean Industries Association (NOIA) congratulated the president-elect and urged his administration to promote wise energy policies that will enhance the ability to create jobs and promote energy security. NOIA president Randall Luthi said, “President-elect Trump should unequivocally reestablish the U.S. commitment to all-of-the-above energy policies. Government projections show that the demand for energy of all kinds will continue to increase in America and around the world for the foreseeable future. Offshore has the potential to be a true energy incubator, supplying both traditional forms of energy and non-traditional sources such as wind, wave, and current.”

Luthi added that “the fact remains that even taking growing renewable energy sources into account, traditional fuels, including oil and natural gas, are expected to supply about 80% of the world’s energy needs for at least the next generation.” He highlighted that traditional energy’s contribution is remarkable and that “unwise federal energy policy has kept approximately 87% of the U.S. outer continental shelf closed to exploration for over 30 years. With the right policies in place, we can produce vastly more offshore oil and natural gas, not only for U.S. consumers, but for people around the globe as well.”

S&P Global Platts observes that President-elect Trump has said he supports all forms of energy and wants the market to decide which succeed. He has promised to open all federal lands and waters to fossil fuel production, in contrast to Clinton, who called for new, stricter limits on oil and gas production on public lands and indicated she wanted U.S. offshore production confined to the Gulf of Mexico. “Trump is widely seen as a far bigger supporter of the oil and natural gas industry, will likely rebuff any environmentalist attempts to curb domestic fossil fuel production, and will likely give U.S. producers access to far more on and offshore plays than Clinton would have,” the consultancy said.

Noted was that Trump’s pursuit of a policy path to open up more U.S. lands and waters to drilling will in turn boost consumption of even cheaper domestic oil and other fossil fuels. Analysts say his broad plans to increase U.S. production and eliminate many of President Obama’s regulatory efforts to combat climate change may result in less demand reduction than if Clinton were elected. In addition, Trump is expected to abandon, or at least weaken, efforts by EPA and the Department of Interior to regulate methane emissions from oil and gas operations. And Trump’s possible efforts to end incentives for alternative energy development would boost near-term demand for fossil fuels.

As NPGA points out, “There is still a lot to digest following this historic election, and we look forward to educating the new administration and Congress. NPGA’s advocacy team will continue to position our industry for legislative and regulatory successes.” The association emphasizes there are always challenges in aligning propane’s legislative goals with those of Congress. “However, with a slightly narrower Republican majority in the Senate, NPGA must maintain its outreach efforts to senators in the Democratic Caucus. Fortunately, propane is everywhere so our grass-roots network will be invaluable in this regard.” — John Needham