As President Obama leaves the Oval Office on Friday, he leaves a legacy of mixed fortunes for the energy industry. While many in the business have been vocal critics of the 44th President and some of his more controversial legislations, there have been a number of positive aspects that occurred under the current administration. When Obama took office in January of 2009, domestic crude production was just 5.1 mmbbl/d, exports of crude oil were not permitted, and the US was importing over 9.8 mmbbl/d of crude. As President-Elect Trump takes office, he will inherit an energy industry with over 8.7 mmbbl/d of domestic production, over 600 kbbl/d of crude exports, and under 7.1 mmbbl/d of imports.
In addition to the usual swings of the highly-cyclical energy business, there have been some dramatic shocks during the Obama presidency. Following the Macondo disaster, the administration enacted a moratorium on deepwater drilling in the Gulf. The moratorium impacted operators and service companies by making the process of applying for new permits much more difficult. Costs spiraled making many projects uneconomic. While other plans, such as federal fracking restrictions, failed to leave a lasting impact, the President has passed through a number of controversial rulings that may create further challenges for the industry. The Clean Power Plan, the denial of Energy Transfer’s permits to complete the Dakota Access Pipeline and the blocking of Keystone XL will likely be overturned by the incoming administration. However, the blocking of Atlantic and Arctic drilling may have a more lasting effect.
For the most part it can be argued that the energy industry has thrived over the last eight years. With a nominated cabinet that includes some of the industry’s biggest supporters, many in industry see Friday’s inauguration of President-Elect Trump as an opportunity to continue some of the positive factors from the Obama’s presidency without some of the restrictions.
Jacob Halevy, Douglas-Westwood Houston
+1 713 714 4787 or Jacob.Halevy@DouglasWestwood.com