‘Drill, baby, drill’ mantra ignites optimism for energy industry 

Between a sour economy, stubborn inflation, mayhem at the border, war around the world, and countless other political issues in this election cycle, there was little time to outline platforms in detail.  

So when it came to energy policy, President-elect Donald Trump would simply say “drill, baby, drill” and rally crowds would go wild. 

It’s a simple phrase, but they knew the code. To them, “drill, baby, drill” meant hope for cheaper gasoline, lower heating and cooling bills, and perhaps groceries and services would be more affordable too. 

Meanwhile, those closer to the energy industry call the phrase an oversimplification of a complex world market buffeted by a variety of man-made and natural forces. But they know the code too, and to them, there is little doubt that political winds have shifted in favor of U.S. oil and natural gas. 

Does that mean gasoline prices will be cheaper and heating costs will be lower? Perhaps, but only time will tell. And while consumers wait to see, energy industries from oil and gas to power companies and alternative energy producers are anticipating how the new administration’s policies will influence their paths forward.   

Judging from rhetoric coming out of the Trump campaign, the oil and gas industry is poised for the most dramatic opportunities for growth and even resurgence on the world stage. Questions remain for power producers and alternative energy constituencies such as wind and solar. 

The details will eventually shake out, market watchers say, and in the end, they expect to see greater market efficiency and a soaring U.S. economy. 

“This is going to be transformational,” said Phil Flynn, an energy market analyst with Chicago-based Price Futures Group.  

“I think we’re going to see a boom,” said Flynn, who’s been watching the undulations of U.S. energy for more than three decades. “It will be a boom of pipeline building, a boom of infrastructure building and that’s what we really need. Everybody always focuses on how many barrels we’re producing, but it also is important to get those barrels of oil and those billions of cubic feet of gas to where they need to go.” 

People undervalue the importance of transportation, Flynn said. Under the Trump administration, he expects to see easier regulatory approval of pipelines and terminals for shipping liquified natural gas (LNG) to Europe and other parts of the world. That can really bring energy prices down, he said, not just for the short term, but for a new generation of Americans that are going to need a lot of energy. 

In the early hours of his administration, President Joe Biden killed the embattled Keystone XL Pipeline from Alberta to the Gulf of Mexico, but Flynn says Canadian producers are just itching to get back to normalcy with other pipeline projects. 

“Let’s face it, those pipelines through North America make the world a more efficient place. They can get oil and gas to where it’s needed in the Gulf of Mexico, so it can get out to the rest of the world.” 

Flynn says Trump could bring energy costs down with his famous mantra, but he doesn’t expect a dramatic difference.  

“It’s not just drill baby drill,” he said. “It’s also a better relationship with our traditional allies, such as OPEC and Saudi Arabia. It’s clamping down on Iran while allowing Saudi Arabia to raise production to make up for it. It’s also about looking out for our other allies to make sure they have the energy they need.” 

Cutting prices in half may sound good, but if prices fall too much, smaller producers may struggle to stay in business, he said. 

Larry Nichols, co-founder and chairman emeritus of Oklahoma City-based Devon Energy, says predicting future oil and gas prices is above his pay grade. 

“That depends upon whether or not we have wars in foreign countries,” said Nichols, whose $25 billion company is among the nation’s leading independent oil and gas producers. “It depends upon supply in foreign countries. It depends on the weather. It depends on the worldwide economy.” 

While influencing oil and gas prices may be difficult for the incoming administration to accomplish, Nichols says Trump could make the greatest impact through deregulation. And that will impact the whole U.S. economy, not just energy. 

“Every single business in the country has been plagued by excessive delays in getting anything done,” he said. “It’s just incredibly difficult to build a new factory, to build a new road, to build a new mine or to do anything without an incredible delay.” 

Mike Moncla, president of the Louisiana Oil & Gas Association, said the last four years under the Biden administration have been a setback for the offshore oil and gas industry.  

While offshore production still accounts for 15% of the nation’s oil and gas production, the industry has made little progress in acquiring new leases to sustain future supplies.  

This was the first time in 42 years that the industry did not have a lease sale for offshore operations in the Gulf of Mexico, and the Biden administration only had three lease sales scheduled over the next five years, he said.      

It takes years to undergo the expensive process of establishing oil and gas production from federal leases in the Gulf of Mexico, and few new concessions have been added to the pipeline under Biden, he said. 

“We are depleting our resources, so if you don’t have the next one ahead as the wells deplete, you don’t have anything to replace it with,” Moncla said. “Just taking the noose off of our necks and letting people go back to work.”  

Meanwhile, Moncla hopes the Trump administration removes the moratorium on new construction of LNG terminals, citing projects in Louisiana that are stalled amid the uncertainty. 

LNG exportation is an enormous economic opportunity for the U.S. and an equally important source of energy for the world, he said. 

If Trump comes in and gives some certainty and stability, those projects will come to fruition, Monca said. Louisiana’s Haynesville Shale is perfectly situated near the Gulf Coast with pipeline infrastructure in place to carry gas to current and future shipping facilities. 

“We like to say Louisiana helped save Europe two years ago from freezing to death,” he said. 

Uncertainty around power industry regulation is likely to continue in Washington amid a quagmire of litigation that is not likely to change under the Trump administration, according to the Virginia-based Thomas Jefferson Institute for Public Policy.       

Meanwhile, the wind industry has reason for optimism, according to public comments offered by Minneapolis-based Mortenson, one of the industry’s leading service providers. 

While they are watching the new administration take shape, the company says the wind industry is pushing forward, capitalizing on current opportunities. But Mortenson’s optimistic outlook is tempered with caution regarding future tax policy, a major driver in the industry’s success.   

Chip Minty is a freelance writer for The Journal Record (Oklahoma City). 

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