Drill, Baby, Drill: Unpacking Trump’s Energy Agenda
Donald Trump’s return to the White House marks a turning point for U.S. energy policy. His administration is expected to focus on increasing domestic energy production, rolling back regulations, and prioritising fossil fuels over renewable energy. This represents a clear departure from Biden’s approach, which aimed to accelerate the transition to green energy through incentives and climate-focused legislation.
As the world’s largest consumer of oil—importing approximately 8.32 million barrels per day as of 2023—the U.S. plays a pivotal role in shaping global energy markets. Any policy shifts under Trump will have significant economic and geopolitical consequences. His administration's policies are expected to affect not only American energy independence but also trade relations, global energy prices, and environmental commitments.
This article explores the key elements of Trump’s energy agenda, from expanding oil and gas production to reassessing international climate commitments. It also considers the economic uncertainties surrounding these policies and their implications for the UK and Europe.
A Shift Toward American Energy Independence
From the moment Donald Trump uttered the words “Drill, Baby, Drill”, it solidified the direction of U.S. energy policy under his presidency.
His administration seeks to cut regulations, boost fossil fuel industries, and reduce reliance on government-subsidised renewables. This represents a significant shift from Biden’s policies, which emphasised renewables and climate initiatives.
One key promise is to reassess the Inflation Reduction Act (IRA), which allocated $783 billion toward clean energy and climate-related tax incentives. Trump’s team argues that scaling back the act will lower costs and ease regulatory burdens on businesses. Critics worry that this could slow the transition to renewables, which have seen record investment, including $114billion in solar power projects since the IRA’s passage.
Withdrawing from the Paris Agreement
One of the most significant expected changes is Trump's intent to withdraw the U.S. from the Paris Agreement, reversing Biden's recommitment to the international climate accord. His administration argues that the agreement places an unfair burden on American industry while benefiting competitors like China and India. If the U.S. follows through with withdrawal, it would no longer be bound by commitments to reduce greenhouse gas emissions by 50-52% from 2005 levels by 2030.
The first Trump administration withdrew the U.S. from the Paris Agreement in 2017, a move that was later reversed under Biden. Repeating this withdrawal would signal a major shift in U.S. climate diplomacy and could influence other nations’ climate commitments.
Critics warn that it could weaken global efforts to combat climate change and hinder international cooperation on carbon reduction. However, Trump’s supporters argue that leaving the agreement would free American businesses from costly environmental regulations and allow the U.S. to set its own energy policies without external constraints.
Expanding Oil and Gas Production
Trump’s administration is expected to lift restrictions on domestic drilling, reversing Biden’s moratorium on new oil and gas leases. The stated goal is to achieve what he calls "energy dominance." Increasing LNG exports is also under consideration. This could help strengthen trade ties with allies while making the U.S. an even bigger global supplier.
Trump has also pledged to revoke Biden’s 2021 Executive Order on Tackling the Climate Crisis at Home and Abroad, which restricted new oil and gas leases on federal lands. He argues that these restrictions have stifled economic growth and contributed to rising energy costs. Additionally, his administration is expected to push for expanding offshore drilling, a move that could face legal and environmental challenges.
The expansion of LNG exports, however, is a matter of debate. A U.S. Department of Energy (DOE) study warns that higher LNG exports could drive up domestic energy prices by as much as 15% by 2030. Trump views energy trade as a bargaining tool. He has suggested that large-scale purchases of U.S. oil and gas could help balance trade deficits and avoid tariffs. While this could benefit American businesses, the actual impact will depend on global energy demand and pricing shifts.
Energy Security for Europe
Since Russia’s invasion of Ukraine, the U.S. has become the EU's largest LNG supplier, providing 44% of Europe’s LNG imports in 2023. Europe aims to move away from fossil fuels, yet U.S. LNG remains a crucial component of its energy strategy. If Trump maintains strong production levels, American energy could continue playing a key role in global stability. However, Europe's climate commitments could limit long-term LNG demand.
Trump has also hinted at leveraging energy trade to negotiate more favourable trade deals with Europe. In a social media post via Truth Social, he suggested that large-scale purchases of American oil and gas could help the EU reduce its trade deficit with the U.S. while ensuring energy security.
The Future of Electric Vehicles (EVs)
Trump’s stance on EVs has evolved over time. He has spoken about removing subsidies, arguing that they distort the market. At the sometime, he supports strengthening the U.S. auto industry. His plan to impose tariffs on Chinese imports is designed to protect American manufacturers.
Elon Musk, CEO of Tesla, has expressed support for Trump's position, saying EV subsidies do not significantly impact Tesla’s business. Other automakers, however, may struggle without government incentives. Indeed, the long-term impact will depend on trade policies and supply chain stability.
Energy Prices: What to Expect
Trump has claimed that energy prices were lower under his administration. While this is partly true, external factors played a role. The COVID-19 economic slowdown kept prices low, whereas Biden faced a price spike due to Russia’s war in Ukraine. Trump’s supporters argue that his policies helped maintain affordability, while others believe that market forces, rather than policy alone, determine future prices.
Crude oil output rebounded under Biden, though Trump’s first term laid the foundation for America’s energy boom. U.S. crude oil production reached a record 13.2 million barrels per day in 2024, surpassing previous levels. If Trump follows through on his promises, businesses and consumers could see lower costs, which in turn could help to reduce inflation too.
Economic Stability and Energy Policy
Reassessing the IRA could save the U.S. government significant funds. Estimates suggest it could cut spending by $700 billion. However, Trump’s broader fiscal policies—such as tax cuts and other incentives—could also increase the deficit. Balancing these factors will be crucial for long-term economic stability.
Global energy markets remain unpredictable. OPEC+ decisions, geopolitical tensions, and supply chain issues all influence prices. Trump's firm stance on Iran could shift global energy dynamics. Under Biden, Iranian oil production surged to 3.3 million barrels per day, much of it heading to China. A tougher approach could alter these trade patterns and increase the level of U.S. exports.
The UK and Europe: Potential Impacts
For the UK, Trump’s energy policies could bring significant changes. He has criticised the UK’s renewable energy commitments and called for increased North Sea oil production. He has also pointed to the departure of American oil company Apache from the UK Continental Shelf, attributing it to high taxation and the extension of the Energy Profits Levy.
The UK imported 5.4 billion cubic meters of U.S. LNG in 2023, and a shift in Trump’s trade priorities could impact supply and pricing. Additionally, Trump’s administration could pressure European allies to increase fossil fuel investments over renewables, which may create tensions with the UK’s net-zero targets.
Looking Ahead
Trump’s second term is expected to bring a shift in energy priorities. The focus will be on economic growth, energy independence, and deregulation. The global energy landscape remains complex, requiring businesses and investors to prepare for shifts in trade, pricing, and regulations. External factors, such as geopolitical conflicts and market forces, will continue to shape the industry.
Conclusion
Trump’s energy policies prioritize traditional sources, deregulation, and increased production. This approach may offer economic benefits, but the long-term effects on energy security, pricing, and climate commitments remain uncertain. As his administration takes shape, the energy sector will need to adapt. Opportunities and challenges lie ahead, and market forces will play a crucial role in shaping the future.
About Big Energy Group
Big Energy Group is a privately held, British-owned energy brokerage with an established track record of helping clients successfully navigate the energy market. The company has offices in Harrogate and the Tees Valley and serves more than 400 businesses across the UK. For more information, please visit bigenergygroup.co.uk.
