The flurry of executive orders President Donald Trump signed on his first day back in office included one that’s of special interest to the Texas oil and gas industry: Trump declared an energy emergency in the U.S. and expressed his intention to promote fossil fuels, as well as end incentives for consumers to buy electric vehicles, along with other Biden administration climate initiatives.
Houston Chronicle reporter James Osborne says U.S. energy production is currently quite high, making it uncertain how lifting of restrictions will impact what comes out of the ground. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: Many have focused on how this executive order is set to impact the Biden administration’s incentives for electric vehicles – what President Trump has called mandates. What will change as a result of the new order?
James Osborne: The biggest thing on electric vehicles is Trump is going to go after what are called CAFE standards, which are basically efficiency standards for [gas-powered] cars – how many miles per gallon a car gets.
The level that Biden has set them at in the years ahead, basically it requires car manufacturers [for] most of their fleets to be electric vehicles. Trump’s going to end that, along with a whole bunch of other policies promoting electric vehicles.
This is all pretty good news for the Texas oil and gas industry. They’ve really faced a sort of existential threat in the decade ahead as Americans move towards EVs, which obviously run on electricity, not oil, the stuff that Texas produces a lot of.
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Trump revived this phrase, ‘drill, baby, drill’ when he signed the order before a crowd in Washington. We’re already producing record amounts of oil and gas, I believe. What is it that Trump really wants to open up here more?
There’s things here and there. Biden did slow oil and gas leasing in the Gulf of Mexico. He cut off leasing in certain federal areas like in Alaska.
But like you said, it’s record production right now. Oil and gas companies are drilling everything they want to right now. What they’re interested in is more about the future of having access. They’d like to have access to more or less everything they can get access to.
And the Trump administration is happy to give it to them. It fits in with their overall messaging that the Biden administration’s policies have driven up costs on Americans, and they’re making the case that energy prices would be lower if more land and waters were available for drilling.
But you talk to economists, people in the energy sector, there’s a lot of skepticism about that. Even if they were to go ahead and open up leasing, which looks like they’re going to, doesn’t really mean that the companies are necessarily going to drill any more or produce any more oil.
At the end of the day, these companies are really drilling oil based on what the market price is. That’s a huge global set of factors that go into that.
Well, Trump’s also lifting a pause on permitting for liquefied natural gas – LNG – terminals, many of which are along the Texas coast. We have an idea of how many projects that’s likely to impact?
Quite a few. There’s a number of projects right now that are before the federal government at various stages. And the Biden administration did put a pause on permitting of new projects. So there will be some projects, they’re saying anyway, will go ahead once the Department of Energy clears them.
Now, whether they actually go ahead, we will have to wait and see. At the end of the day, there’s lots of LNG terminals being built all over the world – in Australia and Qatar. To get an LNG terminal built, you’re going to need to find buyers for the gas and you’re going to need to find people to agree to finance it.
And lately, you know, with the global economy the way it is and China’s economic future not as sort of clear in the next couple of years, investors have been a little wary about sinking money into LNG projects. So we’ll kind of have to wait and see what happens with it. But President Trump is certainly eager to try to get as many of these projects built as he can.
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What’s been the immediate reaction from the energy industry? Are these policies that they’ve been seeking from the incoming Trump administration?
Most of these are things that they’ve sought: more access to federal lands and waters, less regulations. These are the things the oil and gas industry really always wants, always is arguing for. But Trump has also maybe gone a little further than some of them would like.
He did order sort of a halt in enacting provisions of the Inflation Reduction Act. That’s the huge clean energy bill that Biden passed two years ago that while Republicans didn’t vote for, are now sort of enjoying the benefits of as all these projects are being built in red states like Texas. Houston, for instance, has any number of clean hydrogen projects in the works worth billions of dollars off of this legislation.
So now that Trump is going after this, it’s a little unclear where the oil and gas industry is going to sort of come down on this. They’re getting a lot of what they want, but maybe a little more than they asked for. So we’ll have to wait and see in the weeks and months ahead how they handle that.
What else can you tell us about this energy emergency? Are there urgent or time-based actions the president has said he’ll still take?
I mean, it’s a little unclear. The last time there was a “national energy emergency” declared was during the Carter administration. Anyone who was alive back then will remember, you know, coming off the Arab oil embargo, lines around the block for getting gasoline, prices through the roof. And President Carter enacted a series of measures to sort of promote energy conservation and rationing of gasoline.
What Trump has in mind is unclear, though. One Trump official said the other day that this could give him some sort of additional authorities that he might not have otherwise to sort of move ahead on some of these actions he wants to take to promote domestic oil and gas drilling.
So while few energy experts at this point would call this an energy emergency, what we’re in right now – prices right now are pretty stable when you look at over the past couple of decades – what they’re expecting is the Trump administration to use authorities under this to produce as much oil and gas as they think they can.
