Donald Trump says he plans to make America energy independent. He may receive an unintended boost this week in the form of an oil production cut by Organization of the Petroleum Exporting Countries, which could raise crude prices.
Mr. Trump has pledged to slash regulations he sees as impediments to U.S. fossil-fuel industries. But, the U.S. has moved closer to energy independence in recent years. Oil imports are down and exports of natural gas and diesel are up. Overall, the net amount of energy brought into the country fell to 11.2% of domestic need in 2015 from 30.1% in 2006, according to Gregor Macdonald, an independent energy analyst.
Energy experts say the biggest barrier to additional increased domestic oil production today is the low price of crude, not red tape.
While the President-elect has certain extraordinary levers he could try to use to raise oil prices—including restricting imports of crude from countries such as Saudi Arabia—the actions could prove politically controversial, and likely to drive up prices at the pump, something politicians are historically loath to do.
However, OPEC, which declined to curtail its output to put a floor on prices two years ago, is now trying to reach an agreement this week in Vienna to cut production as a way to address a continuing imbalance between supply and demand.
That may be a boon for Mr. Trump and U.S. oil and gas producers, who helped create the global glut by using advances in horizontal drilling and hydraulic fracturing to unlock new supplies. Oil companies would be able to clean up damaged balance sheets, and increase the pace of drilling, if an OPEC production cut leads global prices to tick up over $50 a barrel and stabilize.
In a YouTube video last week detailing his plans for his first 100 days in office, Mr. Trump promised to roll back regulations on energy.
“I will cancel job-killing restrictions on the production of American energy, including shale energy and clean coal, creating many millions of high-paying jobs,” he said.
While industry officials applaud such measures, many say they need higher prices to kick production into another gear.
“To get the full blown benefit of all the reserves out there, you need a higher and stable price,” says Lee Fuller, executive vice president of the Independent Petroleum Association of America.
Although total energy independence may be difficult, if not impossible, for the U.S. to achieve, the country is closer to that goal today than it has ever been since the early 1970s.
In August 2008, the U.S. produced five million barrels a day of crude oil. Eight years later, production was at 8.7 million barrels, according to the latest monthly tally from the Energy Information Administration.
That is down from a peak of 9.6 million barrels daily in April 2015, as domestic oil production has fallen in recent months and imports have risen because lower global oil prices led U.S. producers to idle drilling rigs and cut production budgets.
Still, the strength of American oil production gives Mr. Trump more room to maneuver, and more ability to adopt a foreign policy that challenges Saudi Arabia and the rest of OPEC.
The U.S. boom “offers a grand opportunity to strengthen our ties with our allies and friends and gives us commercial leverage,” said Kathleen Harnett White, a former environmental regulator in Texas who is now a policy fellow at the Texas Public Policy Foundation, a conservative think tank based in Austin.
Mr. Trump and his advisers have railed against OPEC.
“He is operating from this widespread view, formed in the 1970s, that OPEC is manipulating the price of oil to the detriment of the U.S.,” says Robert McNally, president of energy-advisory firm the Rapidan Group and a former National Security Council adviser for energy under President George W. Bush.