Trump 2.0: Market analysts react to new energy appointments

Energy analytics firm Wood Mackenzie says the newest nominees for the US energy sector are focused on boosting investment and enhancing oil and gas production.

PHOTO: Oil pumpjacks near Fellows, California, US. A cogeneration plant is in the background. Getty Images

President-elect Donald Trump’s first two picks to be his senior energy officials are particularly significant, as there is still a “great deal of uncertainty” around how energy policies will play out in his second administration.

Trump has named Chris Wright, the chief executive of oilfield services company Liberty Energy, as the US Secretary of Energy for his upcoming administration, and Doug Burgum, governor of North Dakota, to be the interior secretary and head of a new National Energy Council at the White House.

“The announcements he has made give a clear sense of the direction he wants to set and the objectives he wants to achieve during his four-year term,” said Wood Mackenzie senior vice president Ed Crooks.

Wright has consistently criticised the energy transition strategies proposed by most Western governments, advocating instead for a pragmatic approach that emphasises energy security and affordability over reducing emissions, according to Wood Mackenzie.

Wright argued that the Biden administration's 2022 Inflation Reduction Act (IRA) “appears poised to drive the U.S. electricity grid along the European path [to] higher prices and more grid stability problems."

The IRA extended tax credits for a range of low-carbon energy technologies.

“The common thread in the thinking on energy expressed by both Wright and Burgum is that they want to boost production of all types of energy, including fossil fuels,” Crooks said.

Wright is also slated to become a member of the newly formed Council of National Energy, a federal entity charged with revamping US energy policies across multiple government agencies.

“This Council will oversee the path to US Energy Dominance by cutting red tape, enhancing private sector investments across all sectors of the economy, and by focusing on innovation over long-standing, but totally unnecessary, regulation,” Financial Times quoted Trump saying.

“Trump has reiterated his support to drill more oil and increase US production,” said Vortexa analyst Pamela Munger.

“Any short-term increase in US oil production will more likely be driven by price incentives to drill, a direct function of demand and supply for crude (as opposed to policy measures),” she added.

Proposing Burgum as the head of the US Department of Interior, which oversees key decisions in oil and gas leasing programmes, is also highly significant, Crooks said.

“If they [Wright and Burgum] get to take the reins of energy policy-making under the Trump administration, they will undoubtedly aim to help the oil and gas industry in every way possible,” he added.

The fate of the IRA tax credits for low-carbon energy hangs in the balance because of a slim Republican majority in the US House of Representatives. Energy leaders such as ExxonMobil chief executive Darren Woods have called on President-elect Trump to retain certain energy policies implemented under President Biden, according to Wood Mackenzie.

“If the US increases production resulting in higher exports of seaborne energy, it could likely place additional pressure on top of an already well-supplied market, pushing prices down and even which could lead to a lower production,” Vortexa’s Pamela Munger said.

By Aparupa Mazumder

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