Trump’s Non-Transition — to Nowhere
Trump’s push for the US to stay on oil and gas probably won’t be as good for the oil industry or as bad for the climate as it sounds.
It’s probably foolhardy to try and construct even a foggy vision of what the second reign of Donald the Disruptor will mean for a US energy transition that is already lagging, that is already advanced, and global efforts to slow climate chaos that are already crumbling.
Still, foolhardy as it may be, the tea leaves tell me that while Donald the Destructor’s reign will be bad, it won’t be as terrible as it sounds when Trump describes his love of fossil fuels and his disgust at EVs and massive wind and solar farms.
First, I don’t think Trump actually cares that much about energy. He has bigger fish to fry and could on a whim reverse course on oil and renewables as he has on so many other things. Second, while he’s riding a global trend with many of his attitudes, the long-term trend worldwide is against him when it comes to energy — reducing his chances of success. Finally, even Republican Party politics and Trump’s own love of domestic manufacturing aren’t uniformly supportive of his energy prescriptions.
Shakey Stepping Stones
Trump’s energy goals as stated are very different from the slow, oil-friendly transition the Biden administration was rolling out. Trump wants no transition at all. He wants the US to live on ever more home-produced natural gas and oil, and he wants to stomp on renewable electricity and electrified road transport. But leaving aside the popular theatrics of “drill baby drill,” these appear not so much to be firm goals as stepping stones to his broader objective of . And these particular stones may not take him where he wants to go.
For now, oil and gas together comprise a powerful domestic industry that has grown aggressively and recovered an aura of competence over the last four years, even as so many American enterprises were stumbling. Stumbling applies not just to the likes of Boeing but also to renewables, which the Chinese are better at making and installing than Americans. If your thing is to Make American Great Again as something other than a consumer of stuff other people make, it’s an easy choice between the two.
But these have the feel of transient perceptions on Trump’s part that could change if the status of these sectors changes, not some deep abiding commitment.
Since collapsing amid Covid closures in the last year of Trump’s first term, oil company share prices bounced back in the early Biden years, and the industry’s prestige has soared since. In contrast, the S&P Global Clean Energy Index has fallen “relentlessly” over that period, , losing two-thirds of its value between Biden’s inauguration day and his departure from the White House. High interest rates are partly to blame, since renewables involve heavy upfront investment that’s often on borrowed money, while its savings come in operating costs over time.
Blame can also go to the Biden administration’s heavy tariffs and outright prohibitions on solar equipment, batteries, and EV imports from the dominant producer of all these things: China. This harmed US solar installers and others in the renewables sector, helping only a few small domestic manufacturers. The damage was reinforced by the Biden administration’s emphasis on expensive, impractical alternatives that sent investor dashing into offshore wind, carbon capture, and hydrogen shares, only to pull out again when few, if any, successful projects materialized.
Big Oil held back from spending real money on these side shows, thus avoiding losses even as they benefited from having attention diverted off effective renewables generating options — solar, onshore wind, batteries — and EV expansion that might have hurt their business.
It’s not inconceivable that the two sectors will reverse position in 2025 and beyond, especially if oil faces the low prices Trump wants just as oil demand passes its peak and heads into long-term decline; and if “clean energy” share prices bounce. These shares are “cheap” at the moment, as Wall Street views these things. New US factories could finally start churning out abundant equipment. Trump could do a trade deal with China. All things are possible with Trump — occasionally even beneficial ones.
Riding the Wave — or Crashing
For all his engagement with disruption, there are important aspects of Trump Thought that align with strong global and US socio-political trends — his penchant for nationalism and distaste for expensive wars, for example. But he’s bucking a long-established worldwide trend by embracing fossil fuel growth and rejecting renewables. And it’s a trend even Donald may have trouble disrupting, given not just favorable economics for renewables but also the damage being inflicting worldwide by climate change, notably including in the US.
Roughly 200 nations have signed onto UN climate initiatives that aim at reducing fossil fuel emissions. Even oil exporting countries like Saudi Arabia are spending big bucks trying to diversify their economies in preparation for falling worldwide oil demand.
The Biden administration explicitly singled out China as an opponent in its trade war and chose as weapons the solar gear, batteries, and EVs selected a decade or more ago by Beijing as centerpieces for its 2025 economic transformation. Biden’s intention was to block these Chinese-made products from the US market as an incentive to companies to build up America’s own capacity to manufacture them. A Trump-worthy goal. The result was to slow the US energy transition. But the original goal of shrinking US reliance on fossil fuels remained, even if it fell in priority.
Trump forcefully demonstrated on Day 1 of his presidency that he has no such goal. This leaves American and Chinese energy policies headed in polar-opposite directions: The US towards more fossil fuels, China towards renewable electrification. That’s very different from moving in the same direction at different speeds, as with Biden.
Other countries will be threading their way between these foundationally conflicting energy approaches in the world’s two largest economies. The US has a powerful mix of carrots and sticks to play, including military “protection” and a currency and dollar-supportive financial system militarized through sanctions. But as climate instability intensifies and renewables’ cost advantage over fossil fuels grows, most countries seem likely to lean towards China.
By removing the US as a customer for China’s prodigious and expanding output of solar, storage and auto batteries, and EVs — as well increasingly as wind turbines and other carbon-free energy gear — Washington has ensured that Chinese manufacturers will slash prices even further in order to capture other customers. The EU has tried to ward off Chinese incursions into its EV sector, but is finding resistance tough going. And Europe has long since given up on blocking Chinese solar gear. Southeast and South Asia are big markets for these Chinese products, as increasingly are the Middle East oil exporting countries, for which China is still a key oil customer while the US is not.
Domestic Difficulties
Even if it fails to disrupt the transition at a global level, what might Trump’s energy approach do at home to bolster US oil and gas companies and weaken their clean-energy counterparts? First hints arrived on Day 1 with declaration of a Wide-ranging as it sounds, this amounts mainly to a declaration of war on the Endangered Species Act, to be fought on the heavily Democratic West Coast and US Northeast.
In a world threatened by mass species extinction, that could be a big, destructive deal. But it’s of little use to an oil and gas industry that’s not in buildout mode in those states nor much wishes to be.
The regulatory shortcuts Trump’s declaration outlines could more feasibly help — although renewables don’t appear in a list of energy sources coved by the declaration, so it’s hard to say. What is mentioned in Trump pronouncements that might be useful to solar developers — albeit harmful to plant and animal life — is mining of rare Earth and other “non-fuel minerals,” necessary inputs for making solar components, as well as microchips.
As far as oil and gas production levels go, though — the point of that “drill, baby, drill” stuff — all this is merely a distraction. Trump is removing constraints on access to oil and gas resources on federal lands that don’t contain much desirable oil and gas. The Permian Basin in Texas and Oklahoma and the offshore Gulf of Mexico are where the most profitable oil and gas deposits are, and state and federal regulators alike have always kept access in those places wide open.
Forecasts show a slowdown ahead after years of rapid growth in US production of both oil and gas. Not because of government policies, but because the lowest-cost, most profitable reserves have been developed, and the hefty dividends and other payouts oil companies use to buy investor affection rule out throwing money at less profitable prospects.
What the oil companies want more than anything at this stage is high prices — exactly what Trump does not want. Culturally, Trump and the oil industry may be a good fit. In practical business terms, they’re often at odds.
The two Trump energy pronouncements so far that do have a solidly helpful feel about them from an oil industry perspective are near-automatic licensing of LNG export facilities and withdrawal of support for EVs. But LNG licenses will help only to the extent that somebody wants to buy American LNG for decades into the future, and it’s hard to see who those customers will be as the rest of the world moves increasingly to solar and wind — and the US looks less reliable as a trading partner.
If Trump can’t or won’t do all that much to help oil and gas, what might he do to hurt renewable power generation? He can kill off big floating offshore wind generation, that is mostly in federal waters and requires federal licensing. That’s a big setback for the transition plans of a few Democratic states. The four offshore projects already in operation will stay. But virtually all the vulnerable ones under development are in heavily Democratic Massachusetts, Rhode Island, and New York, or the swing state of Virginia and neighboring Maryland, and they are going nowhere. Disrupting Democratic state plans makes it more fun for Trump. But high and continuously rising costs have recently cast a pall over this sector worldwide, so it’s unclear how much practical difference it makes.
The Republican strongholds of Texas and Florida are coastal states, too, and might theoretically have gone for deep offshore wind. But they have cheaper alternatives. “ the development of renewable energy generation and battery storage within the US, and is estimated to have installed nearly 80% more combined solar, wind and battery capacity than the next largest state” at end-2024, wrote Reuters energy commentator in January. The №2 state is California — often assumed to be the US renewables leader — while Florida is №3.
The reasons Texas has pulled ahead of California are many, but one big result is to complicate any move by Trump against ongoing expansion of solar, onshore wind, and battery storage. Texas’s turn towards renewables is clear indication that solar and wind reduce power costs and increase reliability, since Texas is also the biggest shale-gas producing state. It’s not nearly as much fun or easy for Trump to disrupt transition Texas and Florida as it is in New York and Massachusetts.
All of which demonstrates the obstacles Trump faces in favoring natural gas over renewable power generation. For oil, the issues are different but also complex in both practical and political terms.
Trump has halted federal funding of EV charging stations and set the wheels in motion to flatline auto efficiency standards. This should provide a fillip for US gasoline demand, which has for years been in decline. That’s good news for US oil refiners and marketers. For international players like Exxon and Chevron, though, the benefits have to be balanced against potential damage from Trump’s repeated hammering on Saudi Arabia to increase production and bring down global oil prices. Crude oil prices are always critical for Big Oil, and could become make-or-break if China pulls the world beyond .
On top of this is the threat of lost business for US companies from retaliatory tariffs on US oil and LNG, an act other countries might copy if Trump keeps on tossing tariff threats around.
Predicting Trump’s moods and behavior is too foolhardy a task even for me. The point is that, even if he sticks with the pro-oil, anti-clean energy policies he’s trotted out so far, and even if he decides to ignore his love of American factories and cut off Biden-era funding for new solar, battery, and EV plants — which I don’t think he will — success in selling more oil and gas and killing off renewables is not guaranteed. Arguably not even likely.
Meanwhile, most of the rest of the world — Argentina and a few other super enthusiasts aside — will probably follow China down a path to cleaner energy. That’s if the global economy and its component parts continue to operate in their accustomed manner. Another outcome I would not be so foolhardy as to predict.
