A Bumpy Ride Ahead: What the Future Holds in Store for America’s Energy Policy

The surprise electoral victory of Donald Trump earlier this month continues to shake-up previously held assumptions about what the future holds for American policy, both domestically and internationally, especially in regards to its energy policy. Candidate Donald Trump made many bold claims in regard to energy, and although there is certainly an easily discernable philosophy to be gathered from his statements, one which points towards an ‘America-first’ move away from regulation and the global market. Even as the President-elect has begun to convey this message to the American people, many of the details remain vague enough that several possibilities lay before us now.

One thing seems all but inevitable: most, if not all, of President Obama’s legacy on energy is likely to be reversed. Donald Trump has said in the past that he believes global warming is a hoax, though he has somewhat backed off on his initial statement. But environmentalists are still gravely concerned, not only by statements like those, but also by his promise to deregulate every faction of the domestic energy industry, as well as to push for more domestic production of oil and gas.

As far as exactly how that philosophy will manifest itself, not much is certain, save this: President Trump will likely pull America out of the Paris Climate Accords, the agreement between 195 countries which put in place shared goals at reducing emission trajectories in order to combat the devastating effect of global warming on the planet. He has pledged to withdraw from the commitments made on behalf of America, and he has the full support of the controlling Republican Party on this issue, even as foreign allies and domestic businesses alike urge him to reconsider.

As far as what is to become of our domestic energy policy, the picture is very clear in some instances, and murky in others. Donald Trump and the Republicans have long been proponents of offshore drilling, as well as an increase in overall domestic crude oil production. This includes support for controversial pipelines which the Obama administration have been reticent to support. Trump is expected to fully back the Dakota Access Pipeline, despite the increasing tensions that have arisen as a result of its production, as well as lift Obama’s executive sanctions on the even more divisive Keystone XL pipeline through North America.

Meanwhile, investment in Liquid Natural Gas (LNG) production is expected to a rise under a Trump administration. Coal production, on the other hand, is a much trickier issue to parse. Trump made some of his biggest gains in support throughout swing states with formerly high levels of coal mining production by promising to bring back jobs in that field, mostly by lifting regulations put in place by the Obama administration.

Here, the President-elect must walk a fine-line, , as even the Republican leadership – who succeeded in convincing the public that Obama-led regulation hurt the coal industry – have noted that bringing back coal mining jobs is a “private sector activity.” Major global importers, such as China and India, have moved away from coal imports, and towards green energy, putting coal miners out of work, and federal government may not have much influence when it comes to bringing back those jobs.

If President Trump is able to implement, in one form or another, his larger energy policy of ‘America first’, two things are likely to happen as a result:

First, it seems certain that energy prices in the US will rise, at least initially. There is simply no way around it: with less access to world energy markets, Americans are going to need to accept the reality of higher costs, even as the rest of the world sees further reductions in their costs, thanks to a surplus of energy that is no longer being consumed by the United States.

The second result that is likely to occur, and perhaps the only silver lining for environmentalists and supporters of green energy, is private sector investments in renewable energy sources will see a significant rise. The protectionist policy that Trump has been pushing can’t help but force businesses within the larger American energy industry down that path, since oil will be more expensive. Energy supply chains will have to be designed with more emphasis on renewable energy infrastructure moving forward. The cost of logistics will also likely see a reduction, since there will be less of demand for global shipping of American energy.

Whether or not consumers are willing to accept even a short-term rise in energy costs, and industries such as shipping and logistics are willing to accept a possible reduction in global resources, is yet to be seen. They may well decide that the short-term trade-off is worth it, if they have confidence that it will, in the long-run, make America energy-independent. Such progress will not prove easily discernable let alone easy, so when it comes to America’s future energy policy, everyone should buckle-up and prepare for a bumpy ride.