The stakes are set and they are indeed high, where the hydrocarbons crowd is concerned. Which candidate bodes best for energy? And do other considerations trump our key concern, given the mixed bag that each prospect represents?
by J. Chase Beakley
It has been an unlikely election season to say the very least. After a Republican primary Battle Royale, Donald Trump outmaneuvered a stable of career politicians to win the nomination, leaving prominent figures like Marco Rubio and Chris Christie embarrassed and perhaps permanently tarnished for their participation. On the Democratic side, Bernie Sanders mounted an equally unlikely challenge but after beginning with a hopeful tenor, the Vermont Senator’s campaign soured. Soon the Sanders campaign was nothing but caustic collegiates clinging to a quasi-socialist pipe dream, and super candidate Hillary Clinton slowly, inevitably powered her way to victory.
Now, with commodity price malaise persisting, the world is looking to November as the next inflection point in the market. Before OPEC meets on the 30th, the United States will elect its 45th President and whomever it is will influence the country’s energy policy and the international economy as well. Up to this point, there has been punditry, impassioned endorsements, and open-letters a plenty, but as this historic election enters its final act let’s take a clear-eyed view at what each candidate’s record means for oil and gas in the next four years.
Donald Trump
Donald Trump’s energy policies look like a page torn from a libertarian fantasy novel. On his website he promises to suspend government regulation on a mass scale, remove the EPA’s Waters of the United States (WOTUS) rule and undo President Obama’s Climate Action Plan. He has also promised to renew negotiations with TransCanada about the Keystone XL pipeline and open the Outer Continental Shelf to exploration. It’s clear that Donald Trump is hoping to win support from energy voters. What’s less clear is how many of those promises Trump would be able to fulfill. Nothing is set in stone for Trump; he has changed his stance at will on issues ranging from abortion to the Iraq War, so it’s difficult to determine what principles, if any, he would actually fight for once in office.
Looking at Keystone first, that deal was voted down in Congress so even a President Trump couldn’t ensure its reinstatement and construction. He could certainly push the EPA to suspend the WOTUS rule, which would be a major boon for the energy industry, but the law has already been taken to the 6th Circuit Court of Appeals and won’t be enforced until the trial is resolved. WOTUS is extremely unpopular across the country, and there’s a strong chance that litigation against it could prevent it from ever being fully adopted. Reversing President Obama’s course and declaring open season for drilling on federal lands would be well within his power, but leasing on federal lands has been steadily declining since Ronald Reagan was in office and with the oil market currently struggling with an abundance of supply, bringing new federal lands into play wouldn’t provide relief in the short run.
What energy voters really need is a demand-side push in the global energy market. A President Elect who could stabilize and grow the U.S. economy would be a step in the right direction. Despite Trump’s staunch pro-business stance, his forecasted impact on the economy at large, is unclear. The Economist recently ranked a Trump Presidency as one of its top ten biggest risks to the global economy alongside severe market calamities like a hard landing in China and the dissolution of the Eurozone. If enacted, Trump’s pledge to back out of NAFTA and limit trade with China could cripple the U.S. economy and send shockwaves throughout the rest of the world. And none of this takes into account the fact that he has zero political experience and could likely blunder his way through a steep learning curve.
It would be intellectually dishonest to write about Donald Trump’s candidacy for president without pointing out how inconceivable it is to be doing so. Over the years American politics has seen some nasty rhetoric and some unconventional candidates, but Trump’s unrepentant ignorance of important issues and divisive language are unique. Nothing about his campaign has been easy to predict, and neither is his potential impact on oil and gas. His policies are clearly pro-energy and his opposition to the WOTUS rule would be appreciated by the industry, but his draconian economic policies and volatile personality cast a cloud of doubt over his candidacy.
Hillary Clinton
There are plenty of reasons to have reservations about Hillary Clinton as well, but when it comes to energy policy she’s at least not the worst candidate the Democrats might have nominated. She’s done a fair job of resisting a leftward pull from her party and Senator Sanders’ contingent especially, which should give energy voters hope come November. At a July town hall in New Hampshire, Clinton was heckled by environmental activists who pressured her to ban extraction on federal lands. She responded that while she does believe in raising fees for companies operating on government property, “We still have to run our economy, we still have to turn the lights on.” She went on to explain that although she’s committed to preserving the environment, she wants to do so without endangering the American economy. This did not much please the activists in the crowd, as you may imagine, but Clinton was unfazed.
This exchange is illustrative of Clinton’s broader political modus operandi. Where President Obama is an idealist, Hillary Clinton is very much a pragmatist and that should give energy voters some hope. She will undoubtedly be much more willing to listen to business interests than her predecessor, and has earned a reputation as a willing listener and shrewd dealmaker.
Still, her website lays out plenty of policies that will be hard for voters working in oil and gas to swallow. Among the most troubling, she aims to reduce American oil consumption by a third through cleaner fuels and more efficient vehicles and eliminate tax subsidies for oil and gas companies. Are either of these goals achievable? A President Clinton could work through the EPA to raise MPG requirements again, but after Obama’s recent advancements in that department it seems unlikely that Clinton would want to waste political goodwill on that issue, especially since Republican Congressmen are already dreaming up ways to stymie her administration. Could she push for tax reform for oil companies? She could, but tax reform has to pass through Congress and there’s not much chance of that happening with such a deeply divided legislature.
The American oil and gas industry is hurting, and there are plenty of doomsday theorists preaching that a Clinton presidency would be the last straw to break the camel’s back. However, Clinton’s political savoir faire and commitment to stabilizing the economy gives voters a reason to hope that she might prove to be a better President for the economy than Barack Obama or even Donald Trump. She’s far from the ideal candidate for the energy industry and if she is elected, oil and gas voters certainly will have to push their representatives to call for a repeal of the WOTUS rule and a softening of the requirements for drilling on federal lands. But despite those issues, Clinton is far from the worst oil and gas candidate the Democratic party could have produced.
Third Party Time?
It bears mentioning that third party candidates have been intentionally marginalized in this analysis. Omission of the Green Party’s Jill Stein needs no explanation, because her policies couldn’t be more destructive to energy interests and she polled lower in Texas than the martyred gorilla Harambe. Gary Johnson, on the other hand, might seem like a solution for some energy voters, especially since both major candidates are so strongly disliked. Unfortunately, as Ross Perot and Ralph Nader have thrice proved, third party candidates cannot win the presidency as long as a winner-take-all electoral system is in place. In every state but Nebraska and Maine, the only candidate that receives electoral votes is the candidate with the majority of popular votes. Gary Johnson might earn the support of some disenchanted voters, but he won’t win the majority of the votes in any state, much less in the majority of states. So while he might be much easier to stomach for some voters than Clinton or Trump, he doesn’t have a chance to be President. Perhaps that’s not fair, but it’s reality.
All the important places that the candidates differ have been better documented elsewhere, but on energy policy it appears yet again both candidates are flawed in their own special ways. To many, Clinton embodies all the darker demons of our modern political system and some of her liberal environmental policies cause real concern for a struggling energy industry. For his part, Trump has stunned voters with his naked appeals to fear and nativism, and his anti-free trade policies pose real danger to the economy. No matter who is sworn in next February, the oil and gas industry will face challenges. Luckily, this industry has had some experience with that before.
Chase Beakley is a business journalist based in Dallas, TX. He can be reached via Twitter, @ChaseBeakley.