The stark difference between Hillary Clinton and Donald Trump was crystal clear when it came to energy before and after the election. Clinton wanted to kill coal, and since Trump was elected three coal companies stocks in particular did remarkably well in the market: Arch Coal (ARCH), Peabody (BTUUQ and Alliance Resource Partners (ARLP). While clean coal is a myth, and natural gas has been taking over coal since the fracking revolution began in the mid 2000s – Trump’s love for West Virginia coal miners has given those companies – and miners across America new life.
Under the Obama administration’s strict EPA regulations on utility emissions, particularly on coal has decimated an industry already reeling from low prices. Trump most likely will attempt to roll back these regulations, but it is still a dirty energy rapidly losing luster in the United States (US). Europe has said it is done with coal, but surprisingly the British and Germans are still relying on its cheap source of energy with China and India leading the world in coal-fired power plants.
Trump could attempt to lead a resurgence of coal as a major energy source for U.S. states, and as an export product to other nations, although in the current environment for coal, it seems quite a challenge.
Trump will also have an affect on controversial, yet possibly needed pipelines.
Prime Minister Trudeau of Canada has done an about face against the Canadian environmental movement, and is close to approving the Kinder Morgan pipeline. President Obama and President-elect Trump have both signaled they want the Dakota access pipeline approved. The Keystone XL pipeline once again looks like it will now be approved as well.
While Trump wants to “clear the approval for oil pipelines,” yet what these approvals show for the US and Canada is leaders recognizing jobs as a viable factor, but politicians missed a key point. The world is already awash in oil, and OPEC continues missing opportunities to bump up the price of crude at/or above $60 a barrel or higher. With the Iran-Saudi Arabia geopolitical spat not dissipating anytime soon, especially over oil, the bigger question world leaders need to answer is whether or not these pipelines are needed? Outside of domestic politics and the ability to create jobs for their citizens, which financial entities are willing to invest in pipelines that will have a tough time breaking even in a world awash in crude and natural gas?
Under the Obama administration public lands have been off-limits for oil and gas exploration though President Obama and his former Interior Secretary Jewell (a former petroleum engineer) and current Energy Secretary Moniz have both been key endorsers of fracking for American energy independence, emission reduction, and as a jobs creator. While it may seem Trump is extreme in his environmental views, he isn’t much farther off on environmental policy as President Obama’s Cabinet is currently.
What will be seen under Trump is that regulations are slashed so exploration can be undertaken on Federal lands and coastal areas under Federal moratoriums. The real issue will then be whether or not Federal regulatory agencies have the ability to overtake State law? California as an example, which has billions of barrels of oil and trillion of cubic feet of natural gas off its coastlines, will vehemently fight President Trump and his pro-American energy administration. This is just one of the many legal battles the Trump administration may face from pro-environment-movement US states.
Fracking and drilling for US oil and gas according to President Obama was a key factor, if not the biggest factor, for why the US left the recession quicker than other countries. This agenda could unleash growth that is desperately needed for the tens of millions of Americans contributing to an all-time low Labor Participation Rate (LRP).
Joel Kotkin surmised it best why Trump won:
“Working and middle-class voters went for Donald Trump and helped him break through in states – Michigan, Wisconsin, Iowa – that have usually gone blue in recent Presidential elections.”
Nothing makes value and supply chains thunder towards jobs prosperity the way oil, gas and mineral exploration does at this time.