5-27-16 Trump On Energy: A Work In Progress We Can Support!

Trump In N.D. Yesterday Addressed Fracking, Keystone XL and Alaska

The man is a work in progress that the energy industries can support

by

Dave Harbour

Donald J. Trump file photo courtesy AFP

Yesterday in Bismarck, N.D. Donald Trump made energy related comments at a Q&A appearance before a petroleum conference (Video, bottom, left), wherein he thanked republican delegates for securing his party nomination, then later delivered his main speech.(Video, bottom, right).

Harold Hamm, courtesy KGOU file photo

Trump was obviously schooled by Continental Resources Chairman, Harold Hamm, and mindful of the plight of his coal constituencies in Pennsylvania and West Virginia as readers will see.

We believe that the anti-fossil industry campaigns adopted by the democrat presidential candidates disqualify them from our consideration and support for that and other reasons.

We also believe that while the Donald has done his homework well our review of some of his comments yesterday could assist his campaign in correcting the trajectory of the energy message somewhat, “for windage”.

At the earlier petroleum conference, Trump said he wanted government to, “get out of the way” of energy development on the way to energy independence.   Later in the presentation he made it clear that not all energy regulations, but certainly a majority of them, were unnecessary to proper energy development.  We believe he would be well served to combine those two statements so that critics could not cherry pick his comments to suggest that he favored no regulations at all.

Trump radiated strong support for the Keystone XL pipeline but suggested he would, “make a better deal for the united states.”  He said he wanted, “a piece of the profits,” in return for U.S. government costs incurred in creating certain eminent domain easements for the pipeline’s right of way, and, “for other things”.

“We will make so much money from energy,” Trump said, “that we will begin to buy down our $19 trillion debt.”

We would suggest that this windage correction should find him eliminating the idea of the federal government “profiting” from the permitting process.  Sure, permit applicants pay for permits that partially offset the governmental costs of regulation.  But  putting a profit-based price tag on regulatory approvals and project permits: 1) changes the focus of regulators from just and reasonable permit approvals to a project’s profit potential for the agency; and 2) puts the government’s auditors on the back of the project — like a permanent backpack — for the life of the project as “profits” are defined and litigated; and 3) contradicts his clear goal of removing regulations in order to “get out of the way” of energy development; and 4) adds cost to projects which could make some projects unfeasible and which would have the terrible effect of a) increasing ultimate consumer costs and b) transferring private sector wealth — above and beyond reasonable permitting costs and existing state and local taxes — to government as a de facto tax increase.

He rightly said that pipelines were superior to other modes of transportation, like railroads, and correctly noted that he would never interfere with the marketing of energy because the free market thrives among private entities, without government controls.  However, he will learn that FERC regulation of interstate pipelines and state regulation of intrastate pipelines affects the marketing process as certificates of public convenience and necessity are issued and enforced based on myriad factors affecting marketing including, tariffs, pipeline access, pipeline expansion, quality of service, etc.

Trump stated that pipelines are good as long as they go, “from the right place to the right place”.  If he meant regulatory agencies had some say in the routing of pipelines, he is right.  If he meant that political decisions could dictate where pipelines could originate and terminate he could be contradicting his primary goals of “getting government out of the way” and letting the free market operate as freely as possible, unfettered by government.

Asked about fracking in front of this North Dakota petroleum crowd he managed to support fracking as one of the keys to energy independence while complementing local farmers and reaffirming his support of the Second Amendment.  Then circling back to the fracking issue, he insisted that, “We are over regulated and regulation is more of a problem than taxes.”  He said his democrat opponents want to stop fracking.  “If you ban fracking,” he said, “we’ll be back in the Middle East begging for oil.”

*     *     *

In the later, formal speech, Trump made many of the same points articulated in the earlier, informal presentation (i.e. lower left video), but also surfaced additional messages in part centered around the energy policy liabilities of the current administration and his presidential opponents.

The articulation of these liabilities indirectly provided a number of specific policy positions a Trump administration could be expected to advance, including:

• The current administration opposition to fossil energy production
• We were pleased to hear him say, echoing a term we have used for years now, ”  (President Obama’s) policy is death by a thousand cuts through an onslaught of regulations.
• EPA imposition of unprecedented fines on N.D. producers before a penalty is even confirmed, a totalitarian tactic
• “The Department of Justice filed a lawsuit against seven North Dakota oil companies for the deaths of 28 birds while the Administration fast-tracked wind projects that kill more than 1 million birds a year,” he said
• Alaskans are very familiar with Trump’s allegation that, “The U.S Fish and Wildlife Service abuses the Endangered Species Act to restrict oil and gas exploration,” and, “Adding to the pain, President Obama now proposes a $10-per-barrel tax on American-produced oil in the middle of a downturn.”
• He described the irony of a hypocritical administration that, “lifts economic sanctions on Iran,” while imposing, “economic sanctions on America. He has allowed this country to hit the lowest oil rig count since 1999, producing thousands of layoffs.”
• Trump then listed activities the current president has killed, including Keystone XL, the entire coal industry, blocking access to half of the National Petroleum Reserve  Alaska.

Trump continued a litany of the current administration’s energy offenses, including:

• blocking energy access to 87% of OCS
• closing down Atlantic lease sales which our readers know were supported by the coastal states
• committing the country to the Paris Climate Accords without Congressional concurrence

He hit presidential candidate Hillary Clinton on opposing coal and shale oil & gas but hypocritically supporting development of China’s natural gas resources in order for China to be, “not dependent on foreign oil.”

(On the subject of “coal” and “natural gas” we would caution our candidate and his speech writers that some natural gas/oil producers have jumped on the “kill coal – support the climate change religion” bandwagon because lack of coal power production leads to more natural gas power production.  We would therefore encourage Trump as a supreme use of the “bully pulpit”, to discourage attacks by some fossil fuel producers on other fossil fuel producers.  As our mentor, Benjamin Franklin cautioned, “We must, indeed, all hang together, or most assuredly we shall all hang separately.”)

Trump laid out a list of what his America First energy plan would include.  It would include American energy dominance, energy independence and using energy wealth to rebuild American infrastructure.

He described a “100-day action plan,” beginning with his rescinding of existing, “job-destroying” executive orders, saving the coal industry, supporting Keystone XL, and lifting energy moratoria on federal lands (i.e. see a study your author coordinated for the National Association of Regulatory Utility Commissioners and the Interstate Oil and Gas Conservation Compact on this subject, that we believe could still be useful in identifying the proper policy actions to implement Trump’s plan.  For example, the study uses federal government modeling program that can be easily updated.

Trump concluded by contrasting his, “Make America Great Again”, action plans to, “Hillary Clinton’s Venezuela-style politics of poverty.”

We encourage interested readers to hear the ending directly and funnel that into their analysis of the candidates as the November election approaches.

Yes, we believe the Donald has a few things to learn about energy.  We also believe he’s headed in the right direction.

In short, we believe the energy community can work with Donald Trump even though today we may consider him a, “work in progress”.

Alaska Governor Sarah Palin. NGP Photo by Dave Harbour

If we have any nagging fear, is a memory.  We in Alaska remember supporting Sarah Palin as a conservative person, whose husband worked on Alaska’s North Slope.  Surely, she would be wise in the ways of energy policy.

However, we soon found that she was a “populist” not a “conservative”, created hostility against the State’s most important source of revenue and supported enactment of predatory and even RETROACTIVE new oil taxes that crippled investor interest for a decade until that the law was finally corrected two years ago.

But Trump is not Palin and while foreboding may come with painful memories, opportunity beckons us into a more optimistic future.