President Donald Trump is visiting Texas this week, to raise money for the Republican Party and discuss the country’s energy-dominance agenda with the local oil industry.
Trump’s energy agenda was one of the cornerstones of his campaign and, according to observers, secured him many votes from the oil and gas—and coal—industry. Initially defined as an energy security agenda, during Trump’s term, it became an energy dominance agenda as the second shale boom pushed U.S. crude oil production to the highest ever, turning the country into the largest producer of the world’s most traded commodity.
However, the second shale boom turned out to be a double-edged sword when the oil market swung into an oversupply yet again, with the coronavirus outbreak decimating demand. The federal administration had worked to achieve energy dominance by “cutting regulations, simplifying permitting and encouraging private investment in energy infrastructure,” according to a White House statement cited by the AP. This approach was maintained during the crisis, with Washington refusing to mandate production cuts for private producers as OPEC+ had asked.
As President Trump said at the time, the market would take care of itself. Indeed, while no official cuts were made, Washington undertook to shoulder some of the production cut burden OPEC+ had negotiated with Mexico after an agreement of historical proportions was reached among all the big oil producers in the world this spring. And then U.S. producers started cutting back on production simply because oil prices were too low to break even. At one point, WTI and several other U.S. benchmarks swung deep below zero as traders rushed to offload their positions.
Right now, the energy dominance agenda may be a little compromised because of the unprecedented change in demand for oil and gas resulting from the coronavirus pandemic. Indeed, the pandemic will continue to threaten Trump’s agenda, according to experts, just as it threatens the global economy, with uncertainty marring any outlook for even the short term.
By Irina Slav for Oilprice.com
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