Trump’s Huge Energy Speech Was Hugely Wrong
The GOP front-runner tried to attack the Obama administration’s handling of the energy industry. He wound up showing how little he knows about it.
Donald Trump waded into energy policy in a speech in North Dakota on Thursday, betraying the same lack of basic knowledge about how the energy business works that he has shown on nuclear weapons, international alliances, and global trade.
Trump, celebrating his virtual clinch of the Republican presidential nomination, sought to portray the Obama administration as hostile to energy development, especially of oil and gas, even though in the last eight years the United States has added more oil and natural gas to the global market than any other country.
The presumptive nominee rattled off a litany of confusing or incorrect statements about U.S. and global energy. He said that federal regulations on oil producers make it “harder and harder to turn a profit,” overlooking a historic collapse in oil prices. He said he would legalize U.S. crude oil exports, which Congress already did last year. And he compared sanctions relief on Iran to the Obama administration’s hostile stance toward the Keystone pipeline, complaining that now more oil will flow through Iran’s “pipeline with no environmental review whatsoever.” Iran, of course, exports its crude oil by tankers.
It’s hardly the first time this week Trump’s ignorance of the energy business has bit him. On Monday, the boss of one of the biggest coal companies, Robert Murray of Murray Energy Corp., said he talked energy policy with Trump. He said the candidate readily agreed with many of his suggestions, such as opening up exports of liquefied natural gas, or LNG. Then, Murray said, Trump asked: “What’s LNG?”
In Bismarck, in between non sequiturs on gun rights, Trump also took aim at the energy policies of Democratic front-runner Hillary Clinton, who has advocated more regulation of the energy business and who wants to transition from dirty fossil fuels to renewables like wind and solar power. In a state absolutely battered by the oil price bust of the last year-and-a-half, which has led to layoffs, abandoned housing projects, and a shrinking state budget, Trump portrayed the election as a choice between poverty and plenty.
“It’s a choice between sharing in this great energy wealth [and] sharing in the poverty promised by Hillary Clinton,” he said.
Trump’s energy policies are shaped by his longtime association with Harold Hamm, the CEO of Continental Resources, a big player in the U.S. fracking boom, who Trump said Thursday taught him “everything I know about energy.”
What he knows, by and large, is to repeat standard GOP talking points, crystallized in the “drill, baby, drill” refrain that marked the 2008 race. He called for “energy independence,” an end to regulations on oil and gas drilling and coal production, a repeal of electricity regulations meant to curb greenhouse gas emissions, and giving oil companies greater access to oil-rich areas ranging from the Alaskan wilderness to the waters off the Atlantic coast.
He lambasted the “totalitarian” Environmental Protection Agency, a Republican creation, and said he would approve the Keystone oil pipeline from Canada, provided the pipeline developer, TransCanada, shared profits from the project “with the American people.”
Trump also took aim at the Paris climate accords, a voluntary and nonbinding international agreement reached last December, whereby countries agreed to take steps to clean up their energy sectors to cut the dangerous emissions that are accelerating global warming.
“This agreement gives foreign bureaucrats control over how much energy we use, right here in America,” Trump erroneously said, to loud applause in Bismarck. Under the Paris accords, all climate policies are determined nationally, nothing is binding, and there are no “foreign bureaucrats” involved.
Even his own energy proposals are torn by internal contradictions. Trump has repeatedly promised, and told his North Dakota audience on Thursday, that he would bring back coal-mining jobs to the United States. At the same time, he wants to supercharge the hydraulic fracturing revolution that has made the United States the world’s biggest producer of natural gas.
But it is precisely that flood of cheap gas that has knocked coal off its perch, because utilities prefer to use cheaper fuels to generate electricity. Asked about that at a press conference ahead of the energy speech, Trump instead blamed coal’s problems on government regulations that “have gotten out of control,” as well as proposed Obama administration policies that have yet to come into effect. As for the market forces that have made coal an unappealing source of energy, he said, “Market forces are … beautiful.”
Those same market forces, including a sharp plunge in the price of crude oil from highs of more than $100 a barrel in mid-2014 to less than $40 a barrel earlier this year, have poleaxed the oil patch in places like North Dakota and Texas. U.S. shale oil producers need higher prices than producers in other countries to make money, because blasting open underground shale formations with high-pressure chemical cocktails is more expensive than simply tapping underground oil reservoirs, as in Saudi Arabia.
Thanks to the sustained low prices, oil companies in the United States and around the world have stopped drilling wells, laid off thousands of workers, and slashed their capital expenditure budgets for a record two straight years. While none of that has anything to do with Washington, and plenty to do with a massive glut of oil sloshing around the globe, Trump blasted the Obama administration for causing that pain.
“He’s allowed this country to hit the lowest oil rig count since 1999, producing thousands of layoffs,” he said.
As a remedy for the oil sector’s woes, Trump proposed opening up more areas for exploration, including in Alaska and in deep waters offshore. It is not clear why greater access to expensive Arctic and offshore oil development would be appealing to oil companies, which are shutting down even cheap wells onshore and which can’t make money on those projects at current prices. Even though the Obama administration opened up the Alaskan Arctic to oil production last year, companies like Shell have bailed out of those frontier projects precisely because of the lousy economics.
After railing about all the bloodletting in the oil sector, thanks to plunging crude prices, Trump vowed as president to make America “energy independent.” Even if that were possible, it would do nothing to insulate American oil workers from precisely the kind of global price swings that have so battered them over the past two years.
“Under my presidency, we’ll accomplish a complete American energy independence. Complete. And lots of jobs,” Trump said.
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