Election Portends Change to Energy Industry, But Perhaps Not Prices

Here at Transparent Energy, we are students of history and economic policy, and advocates for customer choice when it comes to energy management. In the aftermath of the latest election cycle, we’ve been fielding calls from clients around the country and across various industries. They want to know how the election results will affect their energy costs. Before we delve into specifics, the most important thing to remember is that markets – not policy – drive prices. Below is a chart showing U.S. natural gas production over the past 20 years:

Source: U.S. Energy Information Administration

The trendline shows that production has been rising steadily across presidential terms and party lines. This increase has been driven by technological advances and growing demand for natural gas due to its flexibility in end-use applications. Simply put, exploration and production companies were able to profit from expanding output and have done so to maximize economic returns – and, in general, large energy users and buyers have benefitted.

At the start of his initial term as president, Trump proposed ‘An America First Energy Plan’ which stated a desire to “maximize the use of American resources…lower costs for hardworking Americans…freeing us from dependence on foreign oil…removing burdensome regulations on the energy industry…and refocus the EPA on its essential mission of protecting our air and water.” Those sentiments are expected to carry over during his second term.

With republican control of the House and Senate, it is likely that Trump will be able to enact policy that promotes fossil fuel production, ends restrictions on LNG exports, and halts U.S. participation in international climate treaties. Most industry analysts believe it is unlikely Trump will be able to terminate the Inflation Reduction Act;, however, it is expected that certain funds dedicated to renewable energy projects will be withheld or diverted elsewhere.

Offshore wind projects which have struggled with supply chain issues, environmental concerns, and economic viability may struggle to proliferate despite the efforts by coastal states to tap into the technology to help meet clean energy targets. The rapid pace of coal plant retirements is expected to slow and the environmental review process for new generators will likely be streamlined. Tariffs placed on imports could increase the cost of equipment used in solar panels and batteries.

Executive Appointments

President-elect Trump has appointed several Cabinet members who still need to be confirmed by Senate. Among these are Energy Secretary Chris Wright, CEO of Denver-based Liberty Energy, and former New York Representative Lee Zeldin as Administrator of the Environmental Protection Agency. While neither appointee has expressed any intended actions beginning on day one, it is expected that the incoming administration will shift the focus away from reducing emissions in favor of promoting U.S. energy dominance. This includes opening new lands for drilling, exporting LNG at record levels, building new power plants to feed AI infrastructure, and securing infrastructure to support American industry at every level.

How Does All This Impact Me and My Energy Budget?

No one has a crystal ball, including Transparent Energy. Do we think Trump administration policies will have an impact on global energy dynamics? Yes. But from an energy price perspective, we do not expect an immediate shift in outlook based on the election.

Market fundamentals and weather will provide the clearest insights into near-term market direction. Supply and demand economics will continue to shape the forward price curves. And, as we said in an article earlier this month based on forward natural gas prices, now is a great time to buy and secure your energy load. That is still the case.

Every presidential administration is faced with countless questions, issues, and unexpected challenges. The U.S. is already the world’s largest producer of oil and natural gas. Only China (with 4 times as many people) produces and consumes more electricity. We are hopeful that the new administration can use these advantages to expand the economy, promote global security, and ensure a healthy environment for future generations.

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Whatever questions you have about buying energy for your business, Transparent Energy has a team steeped in energy market data – and what it means to you – and a proven process and technology for extracting the best price in the market to advance your energy-budget and risk-management goals. Contact us today at letstalk@transparentedge.com.