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Trumponomics: The Energy Shift

Trumponomics: The Energy Shift

January 9, 2017 By admin

BY RSH Inc IN RSHinc On 09-01-2017
By Ranga Chelva Krishna

As of January 20th, Donald J. Trump steps into office; a character colluded with confusion over his policy on geo political issues, to his economic policies. So, what is President Trump going to do? Here’s what has been collated through public sources. There will be changes to the following areas: Energy, The Department of Defense, Bank/Financial Services Regulations, and Healthcare. Some of these changes expected in the form of the repeal of prior acts (e.g. Dodd Frank) others in the addition of blue collar field jobs such as coal mining.

In this specific release, we will be focusing on Energy by looking at output changes and the shifts from renewable to non-renewable energy in the coming 4 years of Trump’s Administration.

As of 2015, The United States energy output production was 88.024 Quadrillion BTU, which is broken down by its sectors of production: Fossil Fuels (Coal, Natural Gas, Crude Oil, NGPL) Nuclear, and Renewable (Hydro-electric, Geothermal, Solar, Wind, Bio-Mass)

Natural Gas was responsible for the highest level of production, 28.061 Quadrillion BTU with Crude Oil being second; responsible for 19.647 Quadrillion BTU. Now the question is will this change under the Trump economy? It’s thought so.

Based on what has been laid out in the public domain about the current policies set to be put in place, and the move to largely fossil fuels such as coal there’s several expected changes in our energy output composition
· Continued increase in Natural Gas Production (~3-5% yearly)
· Coal expected to return to 2005 approximate production values (23.185 Quadrillion BTU)
· Increased Nuclear Energy Production (Currently at 8.4 quadrillion BTU)
· Decrease and or Static Crude Oil production (except when prices are maintained below $50, see previous article on extraction costs for reasoning)
· Decrease in renewable energy outputs e.g. Wind farms, Solar, etc.
· GDP Increase by 2 ½ – 4%

To put these changes into perspective, below are the statistics for Coal Production, Natural Gas Production, GDP Growth, and Steel Production from 2005-2015, the latest available full data.

2005-2015 Summarized
22.6% decrease in coal production
16.6% increase in GDP
51.2% increase in Natural Gas Production
25.4% decrease in Steel Production

As seen, Natural Gas has been a major growing energy producer in the United States, Coal however has been the opposite, slowing yearly. So how can something that’s down 22.6% suddenly increase? And why?

The reason for the believed change in coal production come the Trump Administration is the push for the removal of certain coal regulations put in place, limiting extraction areas, and causing increased extraction costs. “The Stream Protection Rule” is one such series of regulations; finalized in 2014 by President Obama. “The Stream Protection Rule” requires mining companies to abide by strict guidelines on extraction; including the prohibition of coal extraction within 100 feet of active streams, while also requiring the active monitoring of streams and water sources prior, during, and after extraction for pollution changes. This is one such regulation set to be removed by the Trump administration as per his campaign promises; setting the stage for the coal-boom expected.

Other regulations such as the “Oil and Natural Gas Sector: Emission Standards for New, Reconstructed, and Modified Sources” will likely also be targeted, this being imposed emissions regulations on the harvesting of Natural Gas/Oil, preventing some companies to not be able to operate at full capacity as argued. With the repeal of this and similar regulations, continual increase of Natural Gas Production as mentioned earlier will occur; shifting the energy output further as predicted.

Based off the targeting of these regulations by the Trump Administration; and the push for increased extraction of Natural Gas, Coal, etc it’s easy to extrapolate a steady GDP growth per the increased need for blue-collar workers; potentially adding billions of dollars to the economy; making it likely that the GDP will increase its growth rate from that of 2.6% where it was as of 2015, to 3% or higher.

Overall the Trump Administration while pursuing aggressive energy options, which heavily depend on the removal of existing regulations put in place largely by President Obama; will serve to change our energy output composition significantly. Making a more aggressive move to non-renewable res ources than ever before.

 

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