With his sights set on reviving the United States as an “industrial superpower,” President Donald Trump sees fossil fuels as the dominant energy source. “We will drill, baby, drill,” he told the media. “We will be a manufacturing nation again, and we will have something that no other manufacturing nation will ever have, the largest amount of oil and gas that any country on earth has, and we are going to use it.”
He plans to realize this vision by “drastically cutting regulations, exploiting natural resources, cutting taxes, [and] scrapping efforts to tackle climate change,” Courthouse News reported.
Such a future likely would result in increasingly cheaper oil as supply increases, a boon for Trump on two fronts. First, it could lower the cost of manufacturing in the United States. Second, it could reduce gasoline prices at the pump, fulfilling the president’s promise to “lower the cost of energy.”
Those policy announcements will have wildly varying effects on global oil importers, exporters, investors and green energy development. It could also elicit unexpected reactions from other nations affected by Trump’s pursuit of “energy dominance.”
‘Drill, baby, drill’
During his first week in office, Trump declared a “national energy emergency.” AP said the announcement was “a symbolic measure reflecting Trump’s promise of energy expansion. [It also] allows the government to commandeer private land and resources to produce goods deemed … of national necessity.”
According to Morgan Lewis, an international law firm based in Philadelphia, that declaration “facilitates the identification, leasing, siting, production, transportation, refining and generation of domestic energy resources, including, but not limited to, on federal lands.”
It also will “expedite the completion of all infrastructure, energy, environmental and natural resources projects that fall under [the U.S. government’s] purview and … facilitate the supply, refining and transportation of energy in and through the West Coast, Northeast, and Alaska,” said Morgan Lewis.
Trump also plans to streamline new domestic fossil fuel extraction operations. The “U.S. policy is to efficiently and effectively maximize the development and production of the natural resources located on federal and state lands … expedite permitting and leasing of energy and natural resources projects and prioritize the development of … liquified natural gas potential,” the note from Morgan Lewis said. “To accomplish this, [relevant] federal agencies [would] rescind regulations, policies and agency actions … that are inconsistent with this policy, as well as reinstate … land-use decisions that were issued during the Trump administration’s first term,” but annulled by former President Joe Biden to protect the environment.
Additionally, Trump promised to “restore any suspended fossil fuel leases” and deny pending requests from the U.S. Fish and Wildlife Service to create “indigenous sacred sites within the Arctic National Wildlife Refuge,” according to Morgan Lewis. He also removed limitations on fossil fuel extraction on federal land.
He signed an executive order that allows “all agencies … to submit to the White House Office of Management and Budget their plans to eliminate regulations and rules [by the Army Corps of Engineers and Endangered Species Act] deemed ‘burdensome’ to domestic energy production,” AP reported. The order gave “particular attention to oil, natural gas, coal, hydropower, biofuels, critical minerals and nuclear energy.”
Oil influencer?
One of Trump’s biggest grievances is high global oil prices. Three days after his inauguration, he told the media he would talk to members of OPEC, a cartel of 12 of the largest oil producers that held over 79% of total proven oil reserves in 2024, to “bring down the cost of oil.”
Trump aims to “bring prices [at the pumps] down, fill our strategic reserves up again, right to the top, and export American energy all over the world,” he said during his inauguration. “We will be a rich nation again, and it is that liquid gold under our feet that will help to do it.”
He also stated that Russia is benefiting from high oil prices, using proceeds from exports to pursue the war in Ukraine, as it was the third-biggest producer and second-biggest exporter of oil in 2024. “If the price came down, the Russia-Ukraine war would end immediately,” Trump told Davos 2025 attendees. That would achieve one of his campaign promises to quickly end wars around the world.
In 2024, the United States was the world’s biggest oil producer, averaging over 13.4 million barrels a day. That is 19.4% more than second-place Saudi Arabia, which accounted for over 16.1% of global oil production that year. America also has one of the world’s most dynamic fossil fuel markets, ranked as the second biggest importer and fourth largest exporter of oil and gas in 2022, according to the CIA World Factbook.
Nonetheless, the United States has little influence over global oil prices, as it is not part of OPEC, which produced an average of 29 million barrels a day in 2024 and aligns production strategies to regulate prices. It also is not a member of OPEC+, which includes Russia, Mexico and Kazakhstan, bringing oil production in 2024 to 43.4 million barrels daily, over half the global supply. They, too, align their production to regulate prices in their collective favor.
Nevertheless, Trump issued a stern statement for both after his inauguration, saying, “I’m surprised they didn’t [drop oil prices] before the election. That didn’t show a lot of love by them not doing it. I was a little surprised by that.”
That statement came as global crude oil prices dropped from $78.70 a barrel on Jan. 15 (five days before Trump’s inauguration) to $73 on Feb. 25.
Problems for the GCC
For the oil-exporting GCC, which holds over 67% of OPEC’s proven reserves, Trump’s policy could prove problematic. Significantly increasing U.S. oil production would reduce OPEC and OPEC+’s global market share, compromising their ability to control prices.
The resulting lower prices would noticeably hurt the GCC’s economies and government finances. “Assuming Trump’s policy will depress oil prices to $65-$75, some OPEC members would suffer from higher deficits,” said Said Al Shaikh, former chief economist at Saudi National Bank. During his first stint as president, Trump cheered when oil dropped to $50 a barrel.
According to the IMF’s Regional Economic Outlook, break-even for all OPEC nations (except Oman and the UAE) is above $70 per barrel, with the de facto leader (Saudi Arabia) achieving break-even at $91.
One option would be for Saudi Arabia to instruct OPEC and OPEC+ members to increase production “to offset any short-term loss in their income,” betting on economies of scale to reduce their break-even threshold. That strategy would help both cartels retain their global market share, ensuring they can regain control of oil prices in the long term.
Alternatively, both cartels “may resort to further painful production cuts. [However,] this could damage solidarity among OPEC and non-OPEC producers and adversely affect their consensus regarding output policies,” Al Shaikh said. “Cutting output faces big challenges, [seeing how] Russia hesitated in agreeing on cuts a few years ago.”
Regardless, Trump’s aggressive stance on oil production and price invariably means “OPEC and its allies will face a tough task in stabilizing prices,” Al Shaikh added.
Good for the rest
Moses Ekunu, manager at the Petroleum Authority of Uganda, a net oil importer aspiring to exploit its oil reserves, said Trump’s oil policy is favorable.
For one, a “drill, baby, drill” strategy would likely increase U.S. funding for such projects worldwide. “The shift in the U.S. government policy in favor of oil and gas now means that financial institutions are likely going to support these projects publicly,” Ekunu said.
That strategy also should lower gasoline prices for consumers and fossil fuel-dependent industries. That would be a boon for low and middle income net oil importers with manufacturing-led economies. “Oil prices will drop further if OPEC deploys its previous tactics of equally increasing production so as not to lose its market share,” Ekunu said.
Dan Eberhart, CEO of Canary LLC, an oilfield services company, believes the big question facing investors and governments in the coming four years will be: How low does Trump want oil prices to go? “It’s become a crucial question for global oil markets and … the oil industry,” he wrote in Forbes.
Clean energy
To further amplify the effects of his “drill, baby, drill” policy, Trump is introducing roadblocks for existing and new climate-friendly projects.
One of his executive actions removed climate-related provisions in existing “orders and memoranda,” such as those in the Inflation Reduction Act announced in 2022 and a bipartisan infrastructure law passed a year earlier. “All agencies shall immediately pause the disbursement of funds [to eco-friendly projects] appropriated through the acts,” the executive order said.
Trump also froze the Department of Energy’s funding for eco-friendly energy projects, halting $50 billion worth of loans and $280 billion under review, according to the Department of Energy’s published loan portfolio.
Meanwhile, Trump’s executive order also “repelled a Biden order requiring planning for the effects of climate change on world migration patterns.”
Trump also shut out wind energy leases for the Outer Continental Shelf. “We’re not going to do the wind thing,” he told the media repeatedly. “Big, ugly windmills. They ruin your neighborhood.”
Eco-friendly products are under fire as Trump announced he would remove “unfair subsidies” for electric vehicles. “The executive orders indicate that the federal funding for EV and battery manufacturing will be harder to access,” Shay Natarajan, a partner at Mobility Impact Partners, a U.S. investment firm, told the Financial Times. “[That] increases the risk of stranded capital for manufacturing projects already underway,”
In addition, Trump has also shown unwillingness to support other nations’ green agendas, pulling out of the U.N. Paris Climate Agreement, which, among other things, commits wealthy nations to pay for (via the U.N.’s Green Climate Fund) eco-friendly projects in climate-vulnerable countries. “The order blocks transfer of U.S. funds previously obligated,” the Associated Press said.
In February, Mafalda Durate, executive director of the Green Climate Fund, said that Trump’s administration was supposed to commit $4 billion to green projects this year, up from the previous administration’s $3 billion.
Sustainable strategy?
Trump’s pivot to fossil fuels could prove viable despite growing calls for green and renewable energy. “The energy transition may drive a massive increase in renewable-power capacity in the electric market,” the U.S. Energy Information Administration (EIA) said in a research note in 2021. “But … liquid fuel consumption could also be much higher in 2050.”
The EIA’s forecasts range from a 20% increase in oil demand by 2050 to a 50% rise in a “fast-growth scenario.” Most of that demand will come from non-OECD countries, such as India and the United States if future administrations continue Trump’s energy policies.
Part of that demand will go to backing up solar and wind power stations, the EIA said. “These are often the least-cost resource to meet reliability needs and provide energy when solar and wind are not available.”
Nevertheless, Durate believes oil-dependent economies will gradually lose global political influence. “Countries that lead in climate finance will lead the future economy,” she wrote. “Countries that invest in climate abroad — and, in turn, at home — have serious influencing power to shape the global agenda and set a course for multilateral institutions. When nations step back, others step in.”
This article first appeared in March’s print edition of Business Monthly.
