Taking a look at both sides of the coin.
With the impending inauguration of President-elect Donald Trump in less than 10 days, we asked Scott Segal, partner at Policy Resolution Group, for his insight on what he thinks the Trump presidency will have on the energy industry, policies, and overall performance in the market.
On Wednesday, in the first instalment of this five-part series, we asked Mr Segal for his thoughts on what positive outcomes the energy industry might see under the new presidency. In this second post of the series, Mr Segal talks about the drawbacks the energy industry may face under the Trump administration.
The true comeback of the energy sector depends on demand, which in turn relies on business confidence and economic growth. Uncertainties associated with some of Mr Trump’s positions led to some fear that business confidence would suffer at least initially as markets came to terms with his policies. However, despite negative predictions for equities and initial jitters in the futures market on election night, the market now seems favourably disposed to a Trump economy.
Since the election, major indicators have been positive. Goldman Sachs CEO, Lloyd Blankfein, explains why: “Trump’s policies are generally asset and market friendly. The totality of positions he’s staked out … more fiscal spending and lower taxes, potentially lighter regulation; that’s a combination … very supportive of asset prices, very supportive of equities.”
Of course, one exception to this rosy picture is trade policy. Any widespread wave of protectionism could dampen growth and energy demand. For the energy sector, overseas markets for energy efficiency devices and appliances, as well as advanced technologies, could be dampened. And since Mexico liberalised its energy market in 2014, it has been an attractive destination for US energy capital. But assuming that trade policy will fair better the further we get from the heated rhetoric of campaigns, these threats may recede in significance.
For renewable energy, there may be less drive to expand markets as a result of government regulation. However, the growth in renewable power is also a result of efficiency improvements and cost reductions that will continue to stimulate market penetration. And while some Trump advisors, like Continental Resources CEO Harold Hamm, have encouraged a reduction in subsidies and tax incentives for renewables, Mr Trump himself has taken a more ecumenical approach to subsidies when referencing some of his own real estate projects or in the case of fuel ethanol.
Read Mr Segal’s views on the potential positives the Trump presidency could have on the energy industry here.
Next week, Mr Segal discusses the effect the Trump presidency could have on environmental regulations and if the new administration will erase President Obama’s environmental legacy. Is there a balance that could be struck? Learn more on Tuesday.
Scott Segal is a partner with PRG. He has over two decades of experience across a broad range of policy and communications issues, with particular experience dealing with energy, the environment, and natural resources. Other areas of experience range from healthcare to financial services to trade and manufacturing issues. A practising lawyer, Scott assists clients with effective participation in the legislative and regulatory processes. Read his full bio here.
Policy Resolution Group
The Policy Resolution Group (PRG) at Bracewell helps clients around the world navigate our complex federal landscape. They create and implement successful strategies to achieve our clients’ government relations objectives. PRG provides counsel and services in Legislative and Regulatory Affairs, Information Gathering and Political Analysis, Strategic Communications and Legal Representation. Uniquely, PRG delivers results across all these areas – for corporations, industry coalitions, trade associations, entrepreneurs, investors, financial institutions and government entities.