By Scott Huntington
History shows what’s said on the campaign trail often isn’t the best predictor of what actually happens when a president is in office. Priorities change, new situations arise and promises are broken. That historical truth makes predicting what Donald Trump’s upcoming presidency means for oil a difficult task.
However, the future isn’t completely shrouded in mystery. Here’s what we know about Trump’s positions and the impact they can have on oil production and prices.
That desire to create jobs in the U.S. by making it easy to drill and create pipelines seems to have resonated with voters. It also resonated with Wall Street, as stock prices for oil companies rose at the news of his election.
The problem for U.S. producers, say some experts, isn’t so much the regulations but the ongoing low prices for oil. Drilling doesn’t make much economic sense when the price of oil hovers at a low $50 per barrel. It’s those low prices that benefited people at the pumps but rocked the oil industry with layoffs, company closures and low share prices.
However, there are factors beyond the presidency to consider.
Reports state that OPEC is bracing for continued low prices in light of the Trump presidency. If that’s the case, then it might take action in an effort to prop up prices.
It’s also bad news for proponents of renewable energy, as low gas prices tend to stifle the desire to develop new technologies. Trump's support for renewable energy seems limited at this time, which is good for oil producers and not so good for sustainability advocates.
Still, it’s too early to tell what sort of impact a Trump presidency will have on oil. He has yet to be sworn in, and global conditions can sometimes be a bigger contributing factor to oil than even the American president.
As it stands, it looks like low prices will stick around for a while. That would have likely been the case regardless of the election, but it seems like Trump will have an impact on making those low prices last even longer -- for better or for worse.
Image credit: Flickr/Soliven Melindo