Republican presidential nominee, Donald Trump, has pledged to cut American energy costs by half or more, a promise that experts are scrutinizing due to the intricacies of global and regional energy markets.
What Happened: Trump’s strategy to lower energy costs relies on faster permitting, weaker environmental regulations, and other measures to increase oil and natural gas production. However, many oil drillers are hesitant to ramp up production, preferring to return cash to shareholders, The Wall Street Journal reported on Wednesday.
Energy prices are swayed by numerous factors, including weather patterns, global conflicts, and regional market dynamics, which are not easily influenced by executive orders.
“It’s mostly just bluster, because the president actually doesn’t have any direct control,” said Michael Webber, a professor of energy resources at the University of Texas at Austin.
Despite recent easing of price pressures, the national electricity price hike has outpaced overall consumer price increases. A campaign spokeswoman for Trump argued that the effects of his plan would be seen immediately, with energy prices expected to plummet in anticipation of new supply.
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However, the “Drill, baby, drill” mantra has become outdated for many of the largest shale drillers. These companies are exercising caution due to the uncertain global economic outlook and past experiences of market busts.
“There is nothing that you could wave your magic wand at from a political perspective and get that kind of an increase in production,” said Adam Rozencwajg, managing partner at the natural-resource investment firm Goehring & Rozencwajg.
Trump’s promise to ease Biden-era rules on fossil-fuel-fired power plants has also raised questions, as the president has little influence on electricity costs, which are sensitive to the price of natural gas and regional differences in power generation.
Why It Matters: Trump’s deregulation agenda could potentially benefit oil and gas stocks. However, his accusations against OPEC of manipulating oil prices to favor Vice President Kamala Harris have raised concerns.
Furthermore, Citi has warned investors of the risks of a Trump presidency on oil prices due to his oil-friendly policies and proposed tariffs.
Read Next:
- Trump Vs. Harris: Veteran Pollster Nate Silver Says Vice President ‘Slight Underdog To Win The White House’ Due To 3 Factors But This ‘Disruptive Event’ Could Turn Things Around
Image generated using DALL-E
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
