Trump’s deal — rebirth of the fossil fuel industry
As the presidential election in the United States — the world’s largest producer and consumer of energy — approaches, the tug-of-war between the fossil fuel industry and those asserting that the world needs to overcome its addiction to oil is intensifying.
The future of fossil fuels, the emerging global energy picture and climate issues are emphatically back on the US political agenda, and the outcome would carry global consequences. Pakistan won’t go unaffected.
In a meeting last month with top US oil executives at his Mar-a-Lago resort in Palm Beach, Florida, Republican presidential candidate Donald Trump vowed to reverse dozens of the Biden administration’s environmental rules and policies, ‘provided’ they raise $1 billion for his presidential campaign. Trump’s campaign is reportedly trailing behind President Biden in raising funds, and desperation on the issue seems to be creeping into his camp.
A report by The Washington Post, citing unidentified sources familiar with the meeting, said that in the discussions with US energy executives, Trump promised the oil industry executives he would end the Biden emissions rules that were aimed at promoting electric vehicles (EVs) and halt the current administration’s freeze on permits for new liquefied natural gas exports, among other actions.
Plans of reversing US net-zero and clean energy policies could have far-reaching effects on global oil production, setting back sustainable energy efforts by a lot
He further said he would auction off more leases for oil drilling in the Gulf of Mexico and reverse drilling restrictions in the Alaskan Arctic while reiterating his complaints about wind power.
The report added that Mr Trump told the chief executives that giving $1bn would be a “deal” for them. He emphasised that it was a deal for the industry because of how much they’d save when assuming he wins, he guts taxes and regulations.
Last Thursday, Reuters, quoting sources with knowledge of the matter, said if Donald Trump wins the presidential election, he is expected to push the International Energy Agency (IEA) — for which the US provides about a quarter of the funding — back to energy security.
If elected, Donald Trump is likely to pressure the IEA to pivot back to maximising fossil fuel supplies, according to former Trump Administration officials and people familiar with his energy thinking. Sources told Reuters that he would also seek to replace Fatih Birol, the current executive director of the IEA.
The Paris-based IEA was created to ensure the security of supply to developed economies in the aftermath of the Arab oil embargo in the 1970s. However, the Agency is currently pushing the net-zero and clean-energy transition agenda. It has also started to diverge significantly from the Organisation of the Petroleum Exporting Countries (Opec) group in its oil demand growth forecasts.
The IEA seems intent on endorsing the ‘net-zero by 2050’ goal, advocating a major change in the global energy system to include more EVs, renewable power supplies, hydrogen, and all other low-carbon energy sources. The IEA has even infamously said that no new oil and gas developments would be needed if the world stands any chance of reaching net-zero emissions by 2050.
In the wake of the Trump offer, oil industry officials have reportedly begun drafting executive orders reversing the Biden administration’s green policy initiatives on day one of Mr Trump’s potential second presidency, according to Politico. This is bad news for environmentalists.
Ethical concerns about Trump’s ‘deal offer’ to the oil industry are also growing. The offer to oil execs could violate federal bribery laws, Zeeshan Aleem, MSNBC Opinion Writer, said in a piece.
“We’ve known for a long time that Trump will do anything it takes to advance his interests. But these acts that potentially cross the line into vulgar bribery are noteworthy, not because they’ll necessarily make us think less of him, but because of the catastrophic consequences this kind of corrosion of democratic norms could have for everybody else on the planet,” Mr Aleem wrote.
Jordan Libowitz, vice president for communications at left-wing Citizens for Responsibility and Ethics in Washington, told the media that its lawyers are investigating whether Mr Trump’s reported actions violate any federal bribery statutes.
The offer highlights another interesting aspect of the debate. Despite Joe Biden’s progressive tilt, big oil has boomed under him. Yet the question remains: Why is the fossil fuel industry ready to ditch him and stand behind Donald Trump?
Discussing the issue, the Financial Times says the President’s focus on tackling climate change has upset US producers. “Joe Biden has overseen a boom in US oil and gas production, but his pro-climate policies have made him unpopular with the industry.”
To many Democratic voters, such restrictions are long overdue. But in Midland, the west Texas frontier town, the city that sits at the heart of the Permian, at 6.1 million barrels a day, pumps more than Opec powerhouses such as Kuwait, Iraq or the United Arab Emirates and has made the US the biggest oil producer in history, these steps have made Biden an unpopular man, the Financial Times underlined.
“It’s the worst presidency with regard to energy policy I’ve ever seen, and I’ve been involved in energy for 40 years, my entire career,” says Steve Pruett, chief executive of Elevation Resources, in Midland, Texas.
Energy policy is emerging as a key battleground between Biden and Trump. Former President Trump seems set on exploiting the industry’s discontent by telling voters in fossil fuel states that, if re-elected, he would adopt a policy of “drill, baby, drill.”
Mary Landrieu, a former Democratic US senator and now a lobbyist with oil and gas clients, is correct when she says, “The industry is caught between Trump and Biden.” Personal and political interests are overriding everything.
Published in Dawn, The Business and Finance Weekly, May 20th, 2024