You might not have noticed that this is “energy week” in Washington. Like infrastructure week, tax reform week, and all the other policy-oriented weeks of speeches and barely substantive executive orders before it, this latest White House initiative is the political equivalent of vaporware. There’s little in the way of coherent policymaking thought, apparatus, or capability in the Trump administration. And so we tend to get one-pagers, vague promises, and slogans.
As Energy Secretary Rick Perry described it on Tuesday, President Trump wants America to be “energy-dominant.” That’s an alpha-male way of saying that the U.S. should be an aggressor, producing enough energy for us to consume with some left over to export, and having a diversity and supply of resources large enough that we can influence the direction of global prices and insulate our companies and citizenry from the efforts of foreign cartels to inflict misery on them. Oh, and we should change the policies that are inhibiting the energy sector from living up to its full potential. Drill, baby, drill! And frack and mine, too.
But here’s the thing: Every week is energy week in America. We’re already quite energy-dominant. And thanks to a combination of still-chugging Obama-era policies and the general handoff attitude of the last administration toward energy, the energy industry—with one exception—was already thriving before Trump took the oath of office.
Start with oil. Thanks to the fracking revolution, the U.S. has dramatically increased its oil production in the past decade. Between 2006 and 2016, annual production rose 75 percent. The sharply increased production has helped lead to a glut of supply and low prices: Gas is just $2.28 per gallon. That’s caused a lot of disruption for global energy producers, especially those who rely on high prices to break even or, as in OPEC’s case, to fund government operations. In the U.S., however, oil producers have responded to persistent low prices by redoubling their efforts to innovate and further bring down the price of oil exploration and production. So when OPEC tried to bolster prices by limiting production earlier this year, American shale producers kicked into higher gear. The U.S. still imports some petroleum, but not much. Last year, the petroleum trade deficit was just $58 billion, a tiny percentage of our gross domestic product.
Next, natural gas: Despite the inevitable complaints from the industry, companies are fracking the living daylights out of vast stretches of the American interior. The result is a significant increase in production (between 2006 and 2016 natural gas production rose nearly 40 percent), low prices, and a new, cleaner-burning cheap fuel to make electricity. Natural gas’ share of electricity production in the U.S. has risen from 21 percent in 2008 to 34 percent in 2016. Add it up and the U.S. produces more natural gas and petroleum combined than any other country. If you care about energy dominance, there it is.
And there’s more. Natural gas is increasingly being used as a transportation fuel, helping to diversify supplies and further tamp down gas prices. And the U.S. has become a significant exporter of natural gas Natural gas goes to Mexico. But thanks to billions of dollars of private-sector investment in ships and infrastructure, the U.S. is forging new trade routes, sending natural gas to South America, Europe, and Asia. Natural gas exports tripled between 2006 and 2016.
Next, take renewables: A decade ago, the U.S. was essentially nowhere in renewable energies like wind and solar. But these sectors have been booming, thanks in part to direct Obama-era government investments and loans, and thanks in part to long-standing production tax credits (that Republicans have also embraced). More significantly, continuous improvement and an ability to marshal large amounts of capital has allowed the renewables industry to reap the benefits of scale: It gets cheaper as it builds more. In March, for the first time, renewables supplied more than 10 percent of U.S. electricity.
That leaves the one outlier: coal. Coal, for Trump, is a proxy for industry in general and for the energy industry in particular. But it is in long-term decline. Coal is largely used to burn to make electricity. And thanks to America’s energy dominance—thanks to the technologies that have produced lots of cheap natural gas, thanks to the policies and technologies that have led to huge growth in renewables, and thanks to some regulations discouraging the use of dirtier fuels—coal has been unable to keep up. Between 2007 and 2016, coal saw its share of the electricity market fall from 48.5 percent to 30 percent. And foreign demand isn’t exactly taking up the slack. There’s a global turn away from coal.
Now, Trump, Perry, and EPA Administrator Scott Pruitt do have an energy agenda—although no matter what they do, it’s unlikely the U.S. energy industry will see growth in the coming decade that rivals its growth of the last decade.
They want to open up new lands and waters for drilling, reduce regulations that limit the emissions of power producers, and roll back the regulations that have pushed utilities to iron coal out of the mix. All of which would give the fossil-fuel industries a nudge. And while they have made symbolic moves that could, in theory, harm the development of renewables—like pulling out of the Paris Agreement and gutting climate-change research—they haven’t moved to cut the tax credits that make solar and wind viable investments. All of this, of course, makes it only harder for coal to compete.
So it will probably never be coal week in America again. But it will always be energy week.