Donald Trump’s promise of a golden age for oil is fanciful

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Donald Trump’s promise of a golden age for oil is fanciful

The Economist | July 24, 2024

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We will drill, baby, drill!” So thundered Donald Trump in his speech on July 19th at the Republican National Convention, where he accepted his party’s nomination as its presidential candidate.   Mr Trump and his team are keen both to set America’s oil industry free and to unpick Mr Biden’s clean-energy agenda. His supporters invoke vast undeveloped reserves of oil in Alaska and the Gulf of Mexico that would gush forth if only the green boot were removed from the industry’s throat as claimed about Biden administration.  Yet for all the complaints, America’s fossil-fuel industry has done remarkably well under Mr Biden. Oil-and-gas production last year was greater than at any point during Mr Trump’s term. 

Ultimately, investment in the oil business “depends on global supply-demand balances and investor appetites”, says Kevin Book of ClearView Energy Partners, an energy-research firm. The most important factor affecting those balances is not the White House but the Organisation of the Petroleum Exporting Countries, the oil cartel that sets production quotas with the aim of managing crude prices.  It is Wall Street, moreover, not America’s government, that shapes how Big Oil adjusts its investments according to supply and demand. A victory in November for Mr Trump may also do surprisingly little to slow America’s shift towards clean power.  What is more, for all their hostility to Mr Biden, brown industries are just as keen on handouts as green ones. 

No matter what happens come November, America’s low-carbon economy has gained a momentum of its own. Even without subsidies, adding power to the grid with a solar farm is cheaper these days than doing so with a new coal-powered plant. Over 90% of the additional power-generation capacity coming online in America this year will be carbon-free. Big commercial customers, such as the tech giants, which need ever growing amounts of power for their data centres, have made public commitments to cut their net emissions to zero. NextEra Energy, a Florida-based utility that is one of the world’s biggest developers of clean energy, is committed to investing roughly $100bn in solar, wind, batteries and transmission by 2027 regardless of who wins the White House.  A second Trump administration could still slow the greening of America’s economy by fiddling with regulations and abandoning targets for decarbonisation.

3 key takeaways from the article

1. Mr Trump and his team are keen both to set America’s oil industry free and to unpick Mr Biden’s clean-energy agenda. His supporters invoke vast undeveloped reserves of oil in Alaska and the Gulf of Mexico that would gush forth if only the green boot were removed from the industry’s throat.  Yet for all the complaints, America’s fossil-fuel industry has done remarkably well under Mr Biden. 
2. Nevertheless, investment in the oil business depends on: global supply-demand balances, investor appetites OPEC and Wall Street that shapes how Big Oil adjusts its investments according to supply and demand. 
3. A victory in November for Mr Trump may also do surprisingly little to slow America’s shift towards clean power.  What is more, for all their hostility to Mr Biden, brown industries are just as keen on handouts as green ones. No matter what happens come November, America’s low-carbon economy has gained a momentum of its own.  A second Trump administration could still slow the greening of America’s economy by fiddling with regulations and abandoning targets for decarbonisation.

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Topics:  Oil Industry, Green-energy, Environment, OPEC, USA’s Elections 2024