Oil companies see Trump as a staunch ally, but some of his proposals threaten their profits
Bloomberg News
Republican presidential nominee former U.S. President Donald Trump speaks at a campaign town hall at the Greater Philadelphia Expo Center & Fairgrounds, Oct. 14, 2024, in Oaks, Pa. Photo by AP Photo/Alex Brandon
Oil industry heavyweights are lobbying U.S. President-elect Donald Trump’s incoming administration to make good on promises to bolster U.S. energy dominance by offering more drilling opportunities, dialling back environmental regulations and insulating the sector from tariffs.
The proposals are spread across 42 pages of memos to 10 agencies the American Petroleum Institute is presenting to Trump’s transition team, which together outline how the president-elect can translate his “drill, baby, drill” pledge into action. The organization is the U.S. oil industry’s primary voice in Washington and has a long history influencing the nation’s energy policy. It’s now poised to wield even greater sway under Trump.
“We want there to be a whole-of-government-approach” to energy dominance, said Mike Sommers, chief executive officer of the American Petroleum Institute. “This is our comprehensive agenda for the regulatory agencies to get back to that common-sense approach.”
Trump has promised to free up the “vast stores of liquid gold on America’s public land for energy development,” remove “red tape” stranding some energy projects and immediately end outgoing President Joe Biden’s moratorium on approving new natural gas exports.
While oil companies sees Trump as a staunch ally, some of his proposals threaten to erode their profits.
The Republican has occasionally expressed disdain for the economics that rule energy company boardrooms, where executives are under shareholder pressure to keep oil-production growth in check. It’s far from the vision of unrestrained crude production Trump described on the campaign trail. In October, Trump boasted energy prices will plummet because oil companies will aggressively ramp up drilling. “If they drill themselves out of business, I don’t give a damn,” Trump said.
Sommers suggested a different metric. The oil industry’s success, he said, should be measured by whether it’s “advancing the American economy and providing a pathway for ongoing economic growth in the United States.”
Oil companies are bracing for tariffs Trump has vowed to levy on a range of goods, fearing they’ll raise the cost of materials used for wells, pipelines and refineries. They’re also concerned about the prospect he’ll impose duties on crude itself flowing into the U.S. from Canada and Mexico, which refineries depend on to make diesel and gasoline.
The API is asking Trump to not impose tarrifs on crude, natural gas or any essential products the industry can’t source domestically.
“I’m confident the president understands how our energy system works and how important fair trade is for energy — particularly between the United States, Canada and Mexico,” Sommers said. “The president understands how important that free trade is to keep consumer prices low.”
API is pushing to repeal or ease a host of regulations, including air quality standards and mandates governing pollution from power plants, cars and heavy-duty vehicles. But it’s urging Trump’s Environmental Protection Agency to take a lighter touch when it comes to a rule limiting releases of methane from oil and gas infrastructure.
A wholesale repeal of the methane measure wouldn’t eliminate the EPA’s obligation to regulate the greenhouse gas, but it would inject “significant uncertainty” over industry operations and investments, the API says. The group is instead urging the incoming administration to make modest changes to those mandates and to work with European allies that have set methane curbs of their own to ensure continued U.S. LNG sales there.
API’s other recommendations include:
- Advancing a new rule governing pipelines that transport carbon dioxide as a gas, not in a liquid form, arguing that a delay in publishing updated safety standards “exacerbates public concerns and stalls critical infrastructure projects.”
- Holding more auctions of oil and gas leases on federal lands and waters, including a sale for blocks in the Gulf of Mexico next year.
- Repealing Biden-era restrictions on development in the National Petroleum Reserve in Alaska.
The API is also urging Trump against making changes to the Jones Act, a century-old law mandating the use of U.S.-built, -registered and -crewed ships. During Trump’s first term in office, the government considered revoking rulings allowing foreign vessels to transport some equipment to offshore oil rigs. The API now warns any changes risk “significant disruptions to the oil and natural gas industry and the broader U.S. economy.”
Ultimately, Sommers said, the group is seeking “durable energy policy.” The blueprint offered by API is “the recipe for that durable energy policy under President Trump,” he said, “and we’re hopeful that it will survive, no matter who the president of the United States is far into the future.”
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