What Trump Means for Oil & Gas
The election of Donald Trump as US president sent shockwaves through a number of industries, not least oil and gas. Trump’s appointment of former ExxonMobil CEO Rex Tillerson as secretary of state, as well as his executive orders to revive the controversial Keystone XL and Dakota Access oil pipelines, could be seen to show a presidency with the hydrocarbon industry’s best interests at heart. However, when polled, the readers of EnergyBoardroom were generally rather more circumspect in assessing Trump’s implications for their sector.
Keystone XL and Dakota Access Pipelines
On January 24th 2017, President Trump signed presidential memorandums to revive the Keystone XL and Dakota Access pipeline projects. Keystone XL, an extension of the already existing Keystone Pipeline system, had previously been rejected by the Obama administration on environmental grounds. The Dakota Access pipeline has proved controversial because of its route through sacred Native American ground on the Standing Rock Indian Reservation and potential effect on local water sources.
When EnergyBoardroom asked its readers whether Trump was right to sign these orders, only 29 percent answered in the affirmative. 31 percent felt that Trump was not right in signing the orders, while 40 percent were unsure (see chart below).
Source: EnergyBoardroom Poll
Aside from the environmental and religious concerns about these projects, manifested in protests at the proposed construction sites, recent revelations have shown that Trump’s pledges that the pipelines be made solely from US steel may prove hollow. TransCanada, the operator of the pipeline, has revealed that Keystone XL has already been constructed, with only half of the steel used having been made in the US
The Global Oil & Gas Industry
EnergyBoardroom readers were also asked whether Trump’s election was a positive thing for the worldwide oil and gas industry. On the campaign trail, as well as since being elected, President Trump has professed his climate change scepticism and attempted to roll back Obama-era environmental legislation, appointed oil and gas industry insiders to key cabinet positions, and pushed for greater investment in energy infrastructure throughout the US hydrocarbons industry. However, Trump’s economic nationalism and unpredictability has seemingly left many of our readers unsure whether the new president’s rhetoric will actual lead to positive, global, industry developments.
33 percent of our readers were positive that Trump’s election would be positive for the worldwide oil and gas industry; 31 percent felt that Trump would not be positive for the industry; while 35 percent remained unsure on its implications (see chart below).
Source: EnergyBoardroom Poll
Trump’s ‘America First’ agenda aims to support the domestic oil and gas industry, job creation, and local manufacturing; for example, US shale will ramp up drilling and production in response to the OPEC/Russia deal to increase the price of crude oil. However, the US still imports a lot of crude oil – 7.607 million bpd In October 2016 – meaning that protectionist legislation like the proposed ‘border-adjustment tax’ would hurt many US companies by essentially taxing imports. What seems clear is that the future is unclear for the industry, both in the US and globally, with Trump in the White House.
Writer: Patrick Burton