On day one, the incoming Trump administration is expected to pass a flurry of executive orders to reverse President Joe Biden's energy policy, which has weakened U.S. energy leadership.
President-elect Donald Trump vowed to approve new liquefied natural gas projects (after Biden blocked new permits) and to increase domestic oil production. Biden's ban on new LNG export licenses undermined U.S. energy leadership, forcing LNG importers to find alternative suppliers, such as Qatar and Australia.
A sudden increase in production would lower oil and gasoline prices in the short term, reducing inflation, especially in the transportation sector. However, if oil prices decline below $60 per barrel, they would start affecting the economy of oil-dependent countries, such as Saudi Arabia.
As a result of lower oil prices and an increase in spending to finance mega infrastructure projects such as the NEOM, a planned economic zone with artificial islands that has an estimated cost of $1.5 trillion, Saudi Arabia is already running a budget deficit. To increase revenue, the kingdom supported oil-production cuts that have been implemented by OPEC+, a group of oil producing countries composed of OPEC members, plus other non-OPEC producers, such as Russia.
If U.S. oil companies increase production, OPEC+ likely would extend production cuts to support crude prices, but U.S. oil exports would erode OPEC+ market share.
The Trump administration is also expected to revive the Keystone pipeline to bring oil from Canada to the United States. The pipeline would increase U.S. imports from a NATO country and reduce dependence on Persian Gulf countries.
Trump should revive the trade deal with China that was signed during his first term. Under such deal, China agreed to purchase over $200 billion per year of American goods, especially energy and agricultural commodities. However, after Biden was elected, China fell short of its commitment.
Rather than purchasing natural gas from the U.S., China financed the construction of the Power of Siberia pipeline that carries gas from Russia, establishing closer economic ties with Russian President Vladimir Putin.
Reviving the trade deal with China would boost the U.S. energy and food industries, creating jobs and generating tax revenue for coming years.
The appointment of Chris Wright, an advocate for nuclear energy, as secretary of energy may develop nuclear energy power, a carbon-free energy source.
To boost energy security, the U.S. should minimize energy imports from the OPEC cartel and from countries that are hostile to U.S. interests, incentivizing domestic production. To achieve this goal, it is necessary to maximize energy output from different sources, including nuclear energy.
President-elect Donald Trump should be able to restore U.S. energy leadership.
Francesco Stipo is an author and expert in international affairs. He is president of the Houston Energy Club, a member of the National Press Club in Washington D.C. and a Fellow of the World Academy of Art and Science. In 2014, he was invited to join the Bretton Woods Committee. Born in Italy in 1973, Dr. Stipo is a United States citizen. He holds a Ph.D. in International Law, and a Master Degree in Comparative Law from the University of Miami. More here.
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