“Anyone who tells you we can drill our way out of this energy problem doesn’t know what they’re talking about—or isn’t telling you the truth.”
—Barack Obama, 20121
“The United States of America cannot afford to bet our long-term prosperity, our long-term security on a resource [oil] that will eventually run out.”
—Barack Obama, 20112
No one in America was more flabbergasted by the shale oil and gas revolution than President Barack Obama. No one was more thrilled by it than Donald J. Trump.
Trump has always loved the amazing and improbable pro-America energy comeback story. Just loved it. So much so that it would be hard to find an issue that he and Barack Obama disagreed on more thoroughly and fundamentally than energy policy. The contradictory stances reflected their conflicting worldview. Obama’s energy policy was Jimmy Carter redux. We are running out of fossil fuels. They are destroying the planet. We have to shift right now to “green” energy no matter what the cost or risk to the economy and American workers. Obama governed as a true climate change fanatic who genuinely believed that the planet would soon be under water because of the melting of the ice caps—if we didn’t decarbonize immediately and atone for our past sins of burning fossil fuels for the past century.
Trump is more like Reagan: use America’s abundant natural resources. Trump saw instantly the game-changing significance of the American shale oil and gas revolution. He believed in the potential for a big coal comeback. The whole story fit perfectly with his Make America Great Again narrative and its Reaganesque sense of can-do optimism. He saw the potential for millions of high-paying middle-class jobs and massive increases in American production that would leave the Saudis in the dust and crush OPEC once and for all. He saw the shale revolution as a way to bring back to life economically depressed areas that had been left for dead by Obama and the global warming alarmists of the left. Trump viewed the climate change agenda—and the Paris climate accord—with contempt.
For our part, we were in complete agreement with Trump on this agenda from day one. The country desperately needed a new all-in pro-America energy policy. We told Trump at the first meeting of his campaign Economic Policy Council that if his goal was 3 to 4 percent growth, one large step toward getting there would be mining and drilling for America’s vast and nearly inexhaustible energy supplies. We had been early-on enthusiasts for the shale oil and gas revolution that had begun a decade earlier and had changed the entire world energy picture overnight. The United States, we confirmed to him, could become a major energy exporter within five years of his presidency.
We walked him through the program that would for the first time in 50 years liberate America and the rest of the Western world from reliance on OPEC oil forevermore. No more sending tens of billions of dollars a year to Saudi sheikhs.
For Trump, in his usual Trumpian fashion, oil independence wasn’t nearly good enough. “Let’s make America energy dominant,” he practically shouted, and this became a major and recurring theme for the campaign. Now he is on his way to achieving that goal within the first two years of his presidency.
Trump couldn’t understand the logic of why Obama was prohibiting more drilling and exploring for resources on federal lands. It seemed to him—and we agreed—a no-brainer. “If we have these valuable resources,” he reasoned, “we should be using them. Why would we send our dollars to places in the world that are financing terrorists that are trying to kill us?” He also loved the idea of raising billions of dollars of federal revenues from royalties and leases paid by private companies. We suggested that the money could be used for any of three of his other policy priorities: reducing federal borrowing, financing a tax cut, or paying for an infrastructure program.
Stephen Miller, then the president’s policy director for the campaign, was fully on board too. Miller was familiar with the new frontiers that had opened up for American energy due to hydraulic fracturing and horizontal drilling technologies. As a former aide to Senator Jeff Sessions on the Budget Committee, he knew of the growing evidence that oil and gas development could help solve many of the budget problems by raising money for the Treasury at a time when we were running trillion-dollar deficits and the feds could use every penny they could get.
“I want you guys to know,” Miller told us on the campaign plane after one meeting with Trump in June 2016, “Trump is all in on the American energy production issue.” He told us that Trump would be giving a major energy speech and asked if we could prepare a strategy memo that would help define the new energy revolution and also specify the fiscal and economic benefits from Trump’s drill, drill, drill strategy.
This wasn’t a difficult task. Steve had just recently written a book on the topic called Fueling Freedom: Exposing the Mad War on Energy. The coauthor was Kathleen Hartnett White, one of the nation’s foremost experts on energy policy—and a consultant for Trump on energy policy during the campaign and transition. The premise of the book was that the twenty-first century could easily be the century of North American energy supremacy—which would give the United States great economic and geopolitical advantage in the decades to come. Most of the Trump policy team was familiar with the message that America had this new opportunity to increase American fossil fuel production at a fantastic rate.
What Trump wanted to know was the precise steps the federal government needed to take to get us there and open up America’s treasure chest of natural resources.
The Energy Domination Memo
A few days later we sent Miller a memorandum that we called “How Trump Can Capitalize on America’s Energy Opportunity.” We suggested that Trump highlight the following themes in the speech and as the pillars of his America First energy strategy:
Some of these points may seem fairly obvious today. But in early 2016 these new realities of the energy industry were still not widely known or accepted—and some still aren’t to this day. Our major argument to Trump was that this issue was the missing third leg of the stool to get to 3 to 4 percent economic growth.
Trump articulated these America First energy themes throughout the campaign. It became one of his favorite issues. And the Trump voters—especially in the heretofore-blue midwestern states—loved it too. This was a common-sense issue the campaign used to crash through the blue wall in the Midwest and bring Reagan Democrats into the Trump camp.
Harold Hamm and the North Dakota Miracle
We would like to report that we were the primary campaign advisors who turned Trump on to the economic power of the shale oil and gas revolution. But truth be told, that distinction goes to Harold Hamm—the man who turned Trump on to fracking and the boundless potential of domestic shale oil and gas. Harold was the voice on this issue. We were the echo chamber.
It’s appropriate that Trump learned of this amazing and transformational story from Harold because he is the man who is perhaps most responsible for the shale oil and gas revolution. Harold is the CEO of Continental Energy. He is a soft-spoken, mild-mannered, and modest Okie. He is also brilliant and stands beside such American business icons as John D. Rockefeller and Bill Gates for changing the direction of the U.S. economy and bringing massive benefits to American consumers.
Hamm and Floyd Farris of the Stanolind Oil and Gas Corporation and the inventors of modern fracking technologies are the two men most responsible for pulling America out of the wreckage of the financial crisis in 2008–09. These two did far more than Barack Obama or Nancy Pelosi or any politician or economic guru in Washington to bring about the 2009–15 recovery. The real economic stimulus during that time was not the government’s $830 billion spending and borrowing barrage. It was the shale revolution.
Hamm was convinced that the oil deposits stored inside the vast Bakken Shale formation were almost five times more endowed with recoverable energy than the government experts had estimated. He calculated that the entire energy deposit in Bakken was 24 billion barrels—which would make North Dakota one of the three largest oil and gas production states. He proved to be mostly right, which means this single oil development almost overnight doubled America’s proven reserves. When adding this to the Permian Basin in Texas and the Marcellus Shale in Ohio, Pennsylvania, and New York, we have tripled our reserves. “The Bakken is almost twice as big as the oil reserve in Prudhoe Bay, Alaska,” Hamm told us when we first met him in 2012. It is the geological gift that just keeps giving. The massive Bakken oil fields stretch for hundreds of miles from Montana into North Dakota. The pool is bigger than the state of Delaware. Yet amazingly, many Americans don’t even know about this natural resource bonanza right in our own backyard. Through Obama’s eight years in office, his federal regulators acted as if they wished it had never been discovered at all.
The technology that made the Bakken reserve so instantly bountiful is an innovation called “horizontal drilling,” which allows drilling not just two miles deep, a monumental achievement in and of itself, but also then tens of thousands of feet horizontally. Harold Hamm was one of the pioneers of this drilling innovation in the 1990s. It makes oil wells much more productive and long-lived. These drilling innovations were first put to the test in Oklahoma, North Dakota, Texas, Pennsylvania, and Ohio in the early years of the twenty-first century.
Geologists have known the oil was there—though they vastly underestimated how much of it there really was—but it was never considered “technologically recoverable” because there was no known method to extract the energy products at anywhere near affordable costs. Now, thanks to American ingenuity and know-how, we have pioneered those methods to give Americans access to vastly more oil and gas, and it’s becoming cheaper every year.
Hamm almost single-handedly put the lie to the concept of peak oil and the popular Malthusian idea that our energy natural resources are running dry. Hamm scoffs at “these experts [who] have been saying we are running out of oil since the mid-1860s when our oil came from Pennsylvania.”
Hamm’s message to Trump was one of sheer optimism: with the right set of national energy policies, the United States is well on its way to being “completely energy independent by the end of the decade.” No one in the Obama White House was listening—or wanted to listen.
But that’s not all there is to Harold Hamm’s upbeat vision of America’s energy potential. He calculates that if Washington would simply allow drilling permits for oil and natural gas on federal lands and federal waters, “I believe the federal government could over time raise more than $10 trillion in royalties.” That’s $10 trillion with a t, enough to pay off almost half of the national debt! Our fiscal impact numbers were slightly lower than this, but even if Harold’s numbers were off by 50 percent, it was still a staggering sum that made it plain for Americans to see the enormous opportunity from a rejuvenated American energy industry. Trump’s attitude when he listened to Harold was: Why aren’t we doing this all over the country? “Every action the Obama administration has taken on energy policy has been designed to slow down the domestic oil and gas industry,” he would tell Trump.
Before meeting Trump and persuading him of the great potential here to do great things, Harold tried to get Obama behind the initiative. It never went well. Back in 2010, Hamm was invited to a White House dinner and when it was his turn to talk briefly with President Obama, “I told him of the revolution in the oil and gas industry and how we have the capacity to produce enough oil to enable America to replace OPEC as the largest producer. I just wanted to make sure that he was aware of the increasing supply, and what could be done.” So what was Obama’s reaction to that? “He said, ‘Oil and gas will be important for the next few years. But we need to go onto green and alternative energy.’ ” Hamm’s reaction was “Even if you believed that, why would you want to stop oil and gas development?”
One thing that we have always found refreshing about Harold Hamm is that—unlike most leaders running big oil and gas companies—he is thoroughly unapologetic about his industry and the value of the energy power that he supplies in making American households and industry run. If you listen to the pronouncements from the big oil companies like Chevron and BP, they seem almost embarrassed about what they produce, and in order to be seen as “good corporate citizens,” they fund green groups that use the money to try to drive them out of business.
In 2015, in an editorial in Investor’s Business Daily, Steve suggested that Hamm should receive a Nobel Peace Prize. He argued that “Overnight, thanks to Harold Hamm, we have solved the Malthusian world problem of scarcity and rising prices of natural resources. The world is not running out of cheap and abundant energy, we are running into it.
“Some will counter that fossil fuels and fracking hurt the environment,” the editorial continued. “Wrong. Shale gas has been by far the most important development over the last decade at reducing carbon emissions into the atmosphere.”3
Harold may have received an icy reception at the Obama White House, but Candidate and now President Trump eagerly embraced his message that now was the time to unleash a much bigger energy boom for the years to come.
How Shale Energy Changed the World
In 2005 National Geographic magazine published a remarkable cover story titled “The End of Cheap Oil.” This is supposed to be one of the world’s most respected science magazines. What was remarkable about the story was that it was remarkably wrong—every last word of it. Yet this reflected the conventional wisdom of the time—and even that of some today.
This foolish article was written, we now know, right on the eve of the energy equivalent of the “green revolution” that created massive increases in food output due to modern farming techniques in the second half of the twentieth century in the United States and across the planet. The shale industry too emerged unexpectedly and almost overnight. The surge in domestic fossil fuel production and the hundreds of billions of dollars of added national output was unpredicted even by experts in the industry as recently as 2008–09.
You can’t understand what happened to the American economy since 2008 if you don’t understand the shale oil and gas revolution, which Hamm and other drillers created. What they created was the most spectacular oil and gas boom in American history. U.S. oil and gas production from 2007 to 2014 expanded by almost 75 percent.
It didn’t happen because God suddenly endowed America with oceans of new reserves. The oil and gas have been there for hundreds of thousands of years—or more. The spectacular revival of U.S. energy development is a result of America’s technological prowess, entrepreneurial spirit, and a commitment in the industry to expanding domestic output. Humanity cracked the code of how to get at unlimited energy resources.
This drilling revolution saved the American economy. From the beginning of 2008 through the end of 2013, the oil and gas extraction industry created more than 100,000 jobs while the overall job market shrank by 970,000. In other words, for at least the first four years of the “recovery” from the Great Recession of 2008–09, the oil and gas sector of the economy was adding jobs while most industries were shutting down.
Oil and natural gas producers and suppliers added $1.2 trillion to the GDP in 2011 alone. That was 7.8 percent of the nation’s GDP. Oil and gas producers directly contributed over $470 billion4 to the U.S. economy in spending, wages, and dividends—more than half the size of the 2009 federal stimulus package ($787 billion)—only this stimulus didn’t require an act of Congress or massive deficit spending. About one-third of the energy spending investment—or about $266 billion—was for opening and developing new energy projects and enhancing refinery capacity and other downstream operations.
According to Mark Mills, an energy analyst at the Manhattan Institute, “About 10 million Americans are employed directly and indirectly in a broad range of businesses associated with hydrocarbons.”5 He notes that prior to the shale revolution, energy jobs had been falling for 30 years in America. Now energy is one of the major employers in the nation.
There are two types of people in the world: those who get the national significance of this game-changing energy development, and those who don’t. Thankfully, Donald Trump always has.
Most in Washington remained oblivious for a long time. While the shale revolution was getting off the ground, the federal government in Washington, D.C., was pouring money into green energy. Many European governments did the same. But almost all the rise in output of energy over the last decade came from the relatively unsubsidized fossil fuel industry, while almost none of it has come from green energy. This is despite $150 billion in taxpayer financing being pipelined to green energy under George W. Bush and Barack Obama. Amazingly, it was the unsubsidized sector that boomed. The subsidized sector gave us Solyndra, Fisker Automotive, and other bankruptcies.
Progressives contend that oil and other fossil fuels get subsidies too. That is true, and in our opinion they are unwarranted. But for comparison purposes, the Institute for Energy Research has found that for every dollar of subsidy per unit of energy produced by oil and gas and coal, wind and solar get more than $100. There is simply no rational comparison. It would be like comparing the guy who takes dollar bills out of the petty cash drawer with Bernie Madoff.
Made in America Energy
The collateral job growth and community development from this revolution in drilling have been phenomenal. In Youngstown, Ohio, steel plants have been rebuilt. In places like Wheeling, West Virginia, fracking has brought an enormous revitalization to an area that was once left for dead with closed-down steel mills, coal mines, and factories. Now it is a city with BMW dealerships in the heart of town. Farmers in places from Pennsylvania to North Dakota have gotten rich leasing their land for drilling. Meanwhile, thanks to the Marcellus Shale, Pittsburgh is back as an oil and steel town. It has become the capital of the Marcellus natural gas production. Towns like Buffalo are coming back because the workers and families from the Marcellus Shale operations in small-town Pennsylvania spend their earnings in the large cities in upstate New York.
American manufacturing has started to make a comeback in recent years, especially since Trump’s election. Low energy prices due to shale energy have been a major springboard for this recovery. In 2014 the energy group called Energy In Depth documented the impact on manufacturing in the United States from cheap oil.6 It counted over 100 new major manufacturing facilities, with $80 billion in capital investment and 500,000 jobs.
The United States now has just about the lowest electricity prices of any of our major industrial competitors. The differential is gigantic compared to Europe. Our power costs for industry are anywhere from one-half to one-fifth that of producers in Euroland.
Shale gas drilling technologies have lowered the cost of natural gas from approximately $12 per 1,000 cubic feet in 2008 to around $4 in 2015. Natural gas at these low prices has become the second-largest generator of electricity (just slightly behind coal; 1 percent comes from solar power, which is a spit in the ocean), which explains how the United States reduced its carbon emissions more than any other nation over the ten-year period ending in 2015.
The part of this story that appeals to the Trump administration is that as horizontal drilling has triggered this explosion of new natural gas and oil, American reliance on foreign oil has fallen drastically. Monthly oil imports are down by almost 20 percent from what they were eight years ago,7 and by 2019 net imports could be down to zero. This means the elusive goal of energy independence is easily within our grasp in the near term. The math here isn’t complicated. Every time we drill for a barrel of additional oil in the United States, it is a barrel we don’t have to get from OPEC, Russia, or other hostile nations.
Those like Barack Obama who once pronounced that the United States was running out of fossil fuels and that we would soon drill our last barrel of oil have been proven dead wrong. Thanks to the giant shale oil and gas plays in North Dakota, Texas, Oklahoma, Wyoming, West Virginia, Pennsylvania, and Ohio, America isn’t running out of oil and gas; we are running into it.
Of course, the profoundest of ironies here is that the industry that Barack Obama and his regulators despised the most—oil and gas—was the industry that saved his presidency. Now, some might say that Obama made all this happen—and he even took credit for the drilling boom despite the fact that he did everything he could to stop it.
One other economic windfall from America’s fossil fuels renaissance is worth mentioning given the developments of recent years: lower prices for electric power and gasoline at the pump. Before the shale revolution, oil prices were near $100 a barrel and predicted to go higher. For the last three years the oil price, which still fluctuates due to world supply and demand, has averaged about $60 a barrel. The price of gasoline would be at least $1 a gallon more without the shale factor. A rule of thumb is that every penny reduction in gas prices represents more than $1 billion in annual savings to American consumers.
So American families are saving about $100 billion a year due to shale drilling. This is a real and durable stimulus, because this extra money injected into the economy never has to be paid back. The typical household in America spends about $6,000 a year on energy.8 Cutting these costs by 40 percent means nearly $2,400 in savings for each family.
But Trump’s adversaries in the Democratic Party continue to resist the administration’s new pro-drilling policies. Ironically, Democrats are obsessed with reducing “income inequality,” but they seem to miss the point that lowering energy costs reduces the income gap between rich and poor. Census Bureau data reveal that the poor spend twice as large a share of their family budget on energy costs as do rich people. So any restrictive policy—such as cap-and-trade, severe EPA emissions regulations, environmental treaties—would hurt the poor far more than the rich. Any measure to slow down domestic fossil fuel production is nothing more than a regressive tax on those with low incomes.
One study cited in the Wall Street Journal found that the savings to the poor from the reduction in natural gas prices were two to three times bigger than the benefits from the Low Income Home Energy Assistance program.9 And yet shale gas and oil cost taxpayers nothing.
Since energy is a basic input into everything we produce and consume, lower oil prices make everything cheaper—from a candy bar to a computer to an airline ticket. Low domestic energy costs—especially from shale gas—are helping revitalize American manufacturing across the country.
Trump’s Declaration of Energy Independence
Whenever we (led by Harold Hamm) talked to Trump about America’s energy revolution and explained the fantastic growth of the shale industry, we would say: “Sir, imagine how big this could be if Washington were governed by a president in the Oval Office—ahem—who wanted this revolution to happen and expand.” He would nod—he got it and didn’t need prodding.
We explained to him that this shale phenomenon was no flash in the pan or a fad technology that would burn itself out. Just the opposite. The really good news we reported was that the shale oil and gas boom is merely in its infancy.
To date, more than 90 percent of the oil and gas drilling boom has been on private lands. Only about 6 percent has been on public lands. An all-out drilling strategy by Trump could potentially double American production, we have estimated.
Add to this that the technology keeps getting better and better, meaning that the industry can make money even as the price of oil gets lower. At the start, the frackers needed $100-a-barrel oil. Now they can make money at $60 a barrel. Soon it will be $40–50 a barrel.
The key here is for the United States to maintain its unrivaled technological prowess. Just as in medical innovation, where almost all new wonder drugs, vaccines, and medical devices were invented on these shores; and just as in the tech sectors, where almost all new giant digital-age computing breakthroughs were invented in an incubator known as Silicon Valley, so it is with energy innovation. The rest of the world is 10–15 years behind the United States in drilling innovation.
We always stressed one other point. To us as free marketeers, what is most exciting about the potential expanded growth of this industry is that it requires no government subsidies whatsoever. And though some at the Department of Energy under Obama tried to take credit for inventing fracking—even while they disparaged it as an evil technology—this was all driven by the private sector.
Shortly after the election, the transition team asked us to prepare a memo on what steps the new administration should take to vastly increase American energy production and achieve Trump’s goal of American energy dominance. We worked with several experts to put this guidance memo together. One was Harold Hamm. Another was the invaluable energy team at the Institute for Energy Research. And we also relied heavily on the work of Jack Coleman, one of the nation’s premier authorities on America’s storehouse of energy resources. He had been working as a point man on energy policy in the Reagan White House and the Congress for more than two decades and was our energy expert at the Committee to Unleash Prosperity.
We called the memo “How Do We Make America Energy Independent?” and we’re honored to report that many of the ideas have been adopted by the Trump administration and others are in the works. Here is what we advised the Trump team:
The upside from producing American energy—both from an economic and national security standpoint—is almost incalculable. Yet, the American people have not seen a results-oriented national energy program determined to achieve American energy self-sufficiency, and then large volumes to export to the world.
. . . Like every other nation, we should be developing our own oil and natural gas resources. This is a simple matter of economics. Would we rather have the hundreds of thousands of new high-paying oil and gas production jobs in the United States where the investment will turn over in our economy and build it on a broad base, or would we rather send the production investment and oil purchase dollars to other countries to build the economy and create jobs there? There’s nothing wrong with purchasing and importing foreign oil, but there’s a big problem when we’re forced to do so because we’re prevented from producing our own.
So what are the steps that are necessary to create this prosperous and energy-rich future for America?
1. Continue to clear barriers to the exporting of American oil and natural gas. In 2015 Congress strong-armed the Obama administration to lift the legal restrictions, and all remaining regulatory barriers should be eliminated immediately.
2. Allow drilling on federal lands. More than 90 percent of all drilling over the last seven years has been on private lands. There are tens of billions of recoverable oil under federal lands that could be drilled.
3. Build a national network of pipelines across the country by allowing the permitting for projects like Keystone XL and many others.
4. Allow the building of refineries in the United States. The Energy Information Agency says: “The newest complex refinery with significant downstream unit capacity began operating in 1977 in Garyville, Louisiana.”10 So it has been almost forty years since a major new refinery has been opened in the United States even though the U.S. population has nearly doubled since the mid 1970s and our energy production has doubled as well. This is largely due to environmental laws that make refineries in the United States prohibitively expensive if they can be built at all.
5. Put a leash on the EPA to allow our energy resources to be harnessed and used in an environmentally responsible way. The EPA has an agenda to put the coal industry out of business and to destroy the natural gas and oil industries as well and they are succeeding. Environmental rules have to be shown to be cost-effective, meaning that the cost to the economy of complying with the rules is justified on the basis of the environmental benefits—and measured honestly. Very few if any of Obama’s anti–fossil fuels regulations come close to meeting this test. Start by repealing the Clean Power Plan regulations that were meant to decapitate our coal industry.
6. Eliminate regulatory barriers to building nuclear power plants and allow micro-nuclear to be used for energy production.
7. . . . End all subsidies for all forms of energy. The left complains about taxpayer subsidies for oil and gas. To the extent they exist they should be ended. But the cost of wind and solar energy grants, loans, loan guarantees, and so on cost in the tens of billions of dollars.
. . . If we get this right, America—not Saudi Arabia or Russia or OPEC—will be the future energy capital of the world.11
The strategy we proposed was a radical departure from the philosophy of the Obama administration, most congressional Democrats, and virtually all of the green lobby, which, like modern-day Luddites, wanted America to “keep it in the ground” because they worry about man-made “climate change.” This explains why in January 2016 the Obama administration suspended leases on federal lands for coal. It also explains why the Obama administration issued fewer federal land leases than its four predecessors—even as the demand for leases due to fracking soared. Even worse, the amount of time it took to process a permit to utilize land for energy production increased from 205 days under George W. Bush’s final term to 242 days under Obama.12
We estimated that the United States could create at least 1 million new jobs. Residents of North Dakota could vouch for this, as their energy production continues to power the state to the lowest unemployment rate in the country. It is now a place where even McDonald’s workers make $15 an hour and sometimes get signing bonuses. The added production from a nationwide pro-drilling and pro-mining offensive could be worth one percentage point increase in GDP.
The Energy President
Since the day Trump took office, he and his energy secretary Rick Perry and his EPA director Scott Pruitt have been clearing away the multitude of Obama-era hurdles blocking the road to American energy dominance. On no issue did Trump jump out of the gates more quickly than energy policy.
In early 2017 Trump called for a new American renaissance, and not just in renewable energy—but in pursuing the nearly inexhaustible supplies of oil, natural gas, and coal in this country. In June 2017 Trump gave a nationally televised speech calling for “U.S. dominance in global energy production.” He explained that after decades of relying on foreign energy supplies, the United States is on the brink of becoming a net exporter of oil, gas, coal, and other energy resources. In that speech and the subsequent policy direction of his new administration, Trump began to implement many of the strategies we had emphasized in our memo a year earlier. He said correctly that more domestic energy production and expanding opportunities for oil and natural gas exports would strengthen the country’s influence globally, increase America’s economic might, and help stabilize global markets. Energy Secretary Perry has consistently echoed these themes.
Trump also pronounced himself a non-Malthusian—and that he was instead someone who believes that we are not running out of oil and gas. Trump believes that “[o]ur country is blessed with extraordinary energy abundance . . .”13—which gives the United States an enormous strategic and economic benefit. He declared himself all in on ending permanently the 1970s-era ban on exporting oil and gas. (With U.S. oil production booming, former president Barack Obama reluctantly signed a law lifting a decades-long ban on exports as part of an energy deal with the Republican Congress.) Trump is working to ensure this foolish ban never comes back.
The Trump administration reversed a slate of regulations and policies that have limited energy development or made it more expensive, such as the Obama moratorium on new coal leases on federal land mentioned above and regulations that effectively banned coal mining near streams.
The Interior Department has begun to repeal or soften Obama-era mandates that acted as de facto abolitions of hydraulic fracturing. Most important of all, the White House suspended the so-called Clean Power Plan, the Obama administration rule designed to shutter coal production by imposing nearly impossible standards to slash greenhouse gas emissions from electricity production.
Another big Trump energy victory was the lifting of the nearly half-century-long ban on drilling in the oil-rich Arctic National Wildlife Refuge. This could unleash billions of barrels of additional American energy production.
Finally, Trump has issued an Executive Order to require utility companies to take into account the resilience and reliability of our electric power generated from coal and nuclear plants.
Forget Paris
Trump’s biggest boost to the American fossil fuel industry was pulling the United States out of the unworkable and unsustainable Paris climate accord. We were never prouder than when he made this pronouncement in the spring of his first year in office. We have no doubt that many other Republican presidential candidates would have lacked the courage of their convictions and tenacity to take the heat from the left and stick to this pledge. Trump’s decision met with universal hostility in the media, and one CNN reporter even said that it could mean that sea levels would rise dramatically and that parts of America would be fully submerged under water in a few years. European and Chinese leaders blasted Trump and America for “surrendering its world leadership” role. The sanctimonious leaders in Asian and European nations pledged to move full speed ahead on clean energy with or without the United States.
But of course this was always an obvious lie in every way. The Europeans were all in on the Kyoto climate change deal back in 2001—an international treaty the United States rightly rejected. Euroland promised a massive shift to green energy and to abandon fossil fuels to dramatically reduce their greenhouse gas emissions. But guess what? The “green” energy revolution was a bust. None of these countries came close to meeting those targets. Now they, especially Germany, are moving away from the sanctimoniously “clean” (and horrendously expensive) energy sources. So why would we believe them when they say they are now solemnly committed to a new treaty when they violated the last one?
Even more amazing is that the United States—even though we did not make a pledge to reduce our greenhouse gases in accord with that treaty—has reduced our carbon emissions more than almost all of the Paris signatories have. The shale revolution is responsible for reducing greenhouse gases. The conversion of U.S. utilities from coal to natural gas has meant cleaner air. Coal has also become cleaner, which is reducing U.S. emissions.
In other words, the green protesters have it all wrong on fracking and horizontal drilling. These technologies greatly reduce greenhouse gas emissions and make climate change less probable in the future.
Contrary to the flood of insults directed at the Trump administration, the United States is not the bad actor on the world stage on environmental protection; we are the world leader in environmental stewardship.
The even more preposterous claim by the global warming–industrial complex is that China and India—the two largest polluters by far—are moving away from fossil fuels and transitioning to wind and solar power.
Nonsense. Here is what the Wall Street Journal reported in a November 2016 story about China and India “doubling down” on fossil fuel use: “China’s government said it would raise coal power capacity by as much as 20% by 2020, ensuring a continuing strong role for the commodity in the country’s energy sector despite a pledge to bring down pollution levels. In a new five-year plan for electricity released Monday, the National Energy Administration said it would raise coal-fired power capacity from around 900 gigawatts last year to as high as 1,100 gigawatts by 2020.”14
An energy industry newsletter headlined its report in March 2017 with this eye-popper: “Japan, India, and China Still Turning to More Coal throughout 2020s, Which Means More CO2 and Air Pollution.” The Wall Street Journal found that just the increase in China’s coal production will be more than the entire energy use of Canada each year. Has anyone been to Beijing or Shanghai lately? The air is filthy as factories belch out black smoke and clouds of smog that hang over the cities.15
It wasn’t just China that was addicted to coal. At almost exactly the same time that the Paris accord was being finalized in 2015, news reports indicated: “Nearly 2,200 New Coal Power Plants in Planning Worldwide.”16
One study by the prestigious scientific journal Proceedings of the National Academy of Sciences found that the nations of the world were in the midst of a global “renaissance of coal,” not confined to just a few countries like China and India. It found that coal had become the energy of choice for developing nations across the globe. The report indicated, “This renaissance of coal has even accelerated in the last decade.”17
The PNAS study also concluded that coal was popular because “it is often the cheapest energy option in many parts of the world, relative to other sources like oil, gas, nuclear, or renewables.” This meant that those wealthy environmentalists on the left were trying to force poor people to stop using cheap energy and start using expensive energy.
The Paris accord was expensive and ineffectual wishful thinking, with America as usual getting stuck paying the costs. Liberals had stashed a multibillion-dollar slush fund in the bill to bribe other countries to cut their emissions. We were going to take lectures from these nations about saving the planet? This was like taking a lesson in personal hygiene from the Peanuts character Pigpen.
We should have learned by now that with foreign nations, you always have to watch what they do, not listen to what they say. China wasn’t interested in reducing pollution levels. It was hyperfocused on one goal: gaining global industrial dominance and using the cheapest and most reliable energy sources possible to get there. China and Europe wanted the United States to transition to more expensive energy sources in no small part so they could regain competitiveness in manufacturing, transportation, steel, and high-tech products. Europeans had shown they couldn’t compete with the low price of coal and natural gas in the United States, so they wanted us to stop using them.
Trump argued correctly that the United States doesn’t need a massive international bureaucracy at the United Nations to promote clean energy. We had for a decade reduced our carbon emissions more than other nations that had been sanctimoniously attacking the United States as a planetary polluter. The Paris accord would have crippled efforts to tap into our 200-year supply of clean-burning and efficient shale gas, our 250 years of oil, and our 500 years of coal, which, as EPA director Scott Pruitt has noted, had achieved more than a 50 percent reduction in pollution in recent decades. Clean coal is here, and rather than shut down this industry, we should allow technology and innovation to make it cleaner still through gasification and other methods.
The combination of the Obama Clean Power Plan rule and the Paris accord threatened tens of thousands of jobs. For example, EPA rules aim to reduce carbon dioxide (CO2) emissions from U.S. power plants by 30 percent. That’s an enormous and costly burden on our power-generating utilities. According to Energy Ventures Analysis, an energy research firm, the annual costs for residential, commercial, and industrial energy customers in America would be about $173 billion higher in 2020—a 37 percent increase. Average annual household gas and power bills would increase by $680, or 35 percent.18 The poor would take a pounding and gas prices would rise.
For months afterward, the media and green groups groused that Trump’s decision to withdraw from Paris would give China a global lead on the renewable energy technologies of the future. In reality, Beijing has always had only one quest, and that is to replace America as the globe’s economic superpower. Raising energy prices and transitioning to highly inefficient forms of electricity production in China are wholly inconsistent with that goal.
Does any of this sound like the agenda of a planet that is ready to swear off fossil fuels?
How is any of this going to save the planet? It isn’t. We would simply be shifting jobs out of the United States to nations like China and Mexico that use much dirtier energy. Liberals were twisted into a pretzel in defending the Paris agreement. On the one hand, they said that it was needed to save the planet from environmental catastrophe. On the other hand, they argued that the emission targets in the accord were “voluntary,” so they couldn’t cause too much pain and suffering. Our advice to Trump was that Paris was a fraud; the accord meant that the United States would abide by the targets, but the rest of the world would evade them—thus imposing all the burden on America.
Trump has already been proven right. In 2018, Germany acknowledged it will not meet its climate targets. Neither will Australia, Brazil, Japan, and others. Those were false and sanctimonious promises.
Many of the Trump advisors we worked with were genuinely concerned about climate change and wanted action as an insurance policy against an environmental crisis of epic proportions. One point that we, Steve Miller, and Energy Secretary Perry made was that even if you do believe in the apocalyptic predictions, it was naive to believe that any United Nations agreement would save the planet. Governments that can’t balance their budgets, can’t deliver the mail, and can’t keep criminals off the street aren’t capable of changing global weather patterns.
The only effective way to address climate change is through economic growth and technological progress. The richer and more technologically advanced the world will be 50 years from now, the better our grandchildren will be equipped to solve environmental challenges.
While pulling out of the Paris accord, Trump made very clear his doctrine on energy: Americans want a clean environment. We demand clean air and clean water to keep our society healthy. The reductions in pollutants over the last 50 years have been little short of miraculous. But environmental rules need to be made in ways that won’t cripple our economy. The top priority now must be to accelerate economic growth, create more jobs, and expand incomes for workers. No industry is helping achieve that goal more today than our domestic energy producers. End of argument.
Voters Take Down the Green Energy Lobby
Early in the campaign, we sat in on a meeting that Trump convened with energy experts—including CEOs of energy companies and utilities. He asked one prominent CEO what he thought was the proper mix of energy sources to power our $20 trillion economy in the years to come. This executive said: “About 30 percent from natural gas, 30 percent from coal, 30 percent from nuclear power, and about 10 percent from renewable energy.” Trump thought about it for a minute and said: “That sounds about right, except for the 10 percent from renewable energy.” His point was that wind and solar power were so preposterously oversubsidized and inefficient, they should serve only small niche markets in America’s energy future. We happened to agree with that assessment. We had explained to him many times that absent gigantic and unsustainable government subsidies, “green” energy could not possibly compete with cheap coal and natural gas.
The way we put it to Trump was this: Could one think of a more foolish national energy strategy than pumping hundreds of billions more tax dollars into this “green” energy sinkhole? He couldn’t. This would be like buying the stock of rotary telephones on the eve of the release of the iPhone. Cheap and abundant shale oil and gas are here to stay. Yet all Hillary Clinton, Bernie Sanders, the Sierra Club, and the United Nations wanted to talk about was “green” energy.
It’s important to understand that much of the solar and wind industries wouldn’t even exist today—by their own admission—were it not for the exorbitant taxpayer dollars and corporate welfare funding to Big Green through refundable tax credits, research and development loopholes, renewable energy mandates, loan guarantees, consumer incentives, and layer upon layer of other subsidies, many hidden. Solar Energy Industries Association executive director Rhone Resch admitted to Congress: “The reality is that we will lose 100,000 jobs if we lose the investment tax credit—and these are conservative numbers. Ninety percent of solar companies will go out of business.”
If you were to ask what lobby was the biggest loser after the 2016 ballots were counted, it would have to be the “green” energy industry. The day after the presidential election, the Sierra Club sent out a high-alert email to its donors that moaned: “We can’t believe this is happening.” The executive director of the green group called the election “deeply disturbing for the nation and the planet.” Well, yes, if you’re a climate change alarmist who hates fossil fuels, you’re in for a bad four and maybe eight years.
Greenpeace executive director Annie Leonard was even more apocalyptic, saying: “I never thought I’d have to write this. The election of Donald Trump as President has been devastating. . . . There’s no question, Donald Trump’s climate denial is staggering. He wants to shut down the EPA, cancel the Paris Climate Agreement, stop funding clean energy research and drill baby drill.”19
Well, yes, that was exactly what Trump wanted to do. If this was such a crazy and planet-threatening agenda, why did he win?
Americans liked what Trump was saying on energy, and they went to the polls and rejected environmental extremism, among other leftist priorities. That is why the biggest loser on election night was the Big Green movement in America, who were dedicated to the anti-prosperity proposition that to save the planet from extinction we must deindustrialize the United States and throw millions and millions of our fellow citizens out of their jobs. And by the way, the left is caught in its own internal contradictions. If it truly believed that we were facing an extinction-level event, obviously it would be promoting, not resisting, safe nuclear power—which emits zero greenhouse gases.
Voters, smelling hypocrisy, turned their thumbs down on the climate change lobby. Rightfully so.
These groups were openly rooting against American industry and American workers. The Sierra Club actually declared “victory” in 2016 in the war on coal-fired power even though it helped push several of America’s leading coal production companies into bankruptcy. Sierra Club spokeswoman Lena Moffitt took credit for helping to reduce coal use in America, but she neglected to mention the tens of thousands of miners, truckers, construction workers, and other blue-collar workers who lost their jobs due to the Sierra Club campaign. What humanitarians these people are!
They also hate natural gas, even though it is a clean-burning fuel. Moffitt promised that the Sierra Club would “bring the same expertise that we brought to taking down the coal industry and coal-fired power in this country to taking on gas in the same way . . . to ensure that we’re moving to a 100% clean energy future.”20
There are an estimated 10 million Americans who are directly or indirectly employed by the oil and gas and coal industries. And leftist “green” groups were openly boasting to their donors that they hoped to put every one of these people out of a job? The voters whom we had met in states like Ohio, Pennsylvania, Wisconsin, Indiana, and Michigan weren’t so excited about losing their jobs at the hands of climate change fanatics. They viewed this as another ploy by Washington to ruin their lives and completely ignore their economic plight in favor of grandiose dreams of the government somehow changing the weather.
In so many ways, climate change was one of the primary issues that allowed Donald Trump to crash through the blue wall of the industrial Midwest. The Democrats’ witless opposition to building the Keystone XL pipeline, which could create as many as 10,000 high-paying construction, welding, pipe-fitting, and electrician jobs, is emblematic of how the party that was supposed to represent union workers turned its back on its own members and their families.
In the Trump campaign, we weren’t at all surprised that at the end of the day, voters massively rejected the radical environmental agenda predicated on making America poorer. Why was the left so surprised by this result? We always told Trump that nearly every poll for at least the last five years had shown that climate change barely registers as a leading concern of American voters. Jobs and the economy were always issues number one and two, and global warming was usually close to last on the list. A 2015 Fox News poll found that only 3 percent of Americans believed that climate change was “the most important issue facing America today.” That meant 97 percent disagreed with Barack Obama, Hillary Clinton, Bernie Sanders, and Tom Steyer that global warming was the greatest threat to America.
This didn’t stop Hillary Clinton from telling West Virginians that she would put every coal miner out of a job. Then she wondered why she got crushed in this unionized, historically reliably Democratic state.
Coal’s Colossal Comeback
One theme of this book is that Donald Trump has a talent for proving his critics wrong. His victory was, of course, the prime example, but consider also the coal industry comeback.
During the campaign, we would debate liberal energy experts associated with Obama or Hillary Clinton who were contemptuous of the Trump claim that he would rebuild the coal industry and save jobs in rural coal towns across the country. In short, Trump’s critics were certain that there was no way Donald Trump could or would ever revive the coal industry.
He was called a liar and a charlatan for going to West Virginia and Pennsylvania and other parts of economically depressed Appalachia promising that he would bring back coal jobs. “Coal is dead,” the Sierra Club declared triumphantly to its donors in 2016. “Coal Isn’t Coming Back,” a New York Times piece assured us a few weeks after the election. “Saving coal is one promise he [Trump] won’t be able to keep,” the author predicted.21
Jason Bordoff, a policy advisor in the Obama White House and now the director of Columbia University’s Center on Global Energy Policy, insisted when Trump rolled back Obama’s anti-coal executive orders: “Scrapping the Clean Power Plan may slow the decline of coal—but it’s not bringing coal back.”22
Well, coal and mining are back. In the year since Trump’s election, America added 50,000 more mining jobs after years of steady decline. Hillary Clinton, by contrast, promised her left-wing millionaire and billionaire environmental friends that she would put every remaining coal worker out of a job.
She wanted to finish the job started by Obama in their war against fossil fuels. A 2015 report by the American Action Forum found that coal-fired power plants shed about 40,000 jobs under Obama, and at least 10,000 coal mining jobs were lost through 2015.23
It should be noted that, after the election, despite Trump’s pro-coal campaign, coal’s role in U.S. energy production still declined. According to the Energy Information Administration (EIA), which tracks energy use in production on a monthly basis, about 1.2 billion megawatt hours of electricity came from coal in 2017—the lowest year for coal in the last decade.24 Meanwhile, the EIA is forecasting that natural gas is going to remain the primary energy source for electricity generation.25 Natural gas passed coal in electricity production for the first time in 2016 and, as of the most recent rolling 12-month totals, is still well ahead.
That’s not all. The Department of Commerce’s Bureau of Economic Analysis reported on July 21, 2017, that “mining increased 21.6 percent . . . The first quarter growth primarily reflected increases in oil and gas extraction, as well as support activities for mining. This was the largest increase since the fourth quarter of 2014.”26
As for the drilling and mining industries, they have gained more than 50,000 jobs since Trump’s election. Many of these were in the oil and gas industry, but some were in coal, whose output increased 12 percent in 2017.
Liberals complain that coal activity isn’t a major producer of jobs because the industry is producing a lot more coal with a lot fewer workers. That is absolutely true. That is called productivity. A study by the Institute for Energy Research points out that it takes wind and solar at least 30 times more man-hours to produce a kilowatt of electricity than are required to produce that same energy from coal or oil. If you don’t think this productivity advantage of fossil fuels is a good thing, then you probably think we should bring farm jobs back by abolishing tractors and modern farm equipment.
But coal jobs are not just tied to the actual mining of coal. Coal is tied to steel jobs, trucking jobs, and manufacturing jobs. Using cheap and efficient energy makes every other American industry more productive, and thus makes American employers far more competitive in global markets. Productivity creates higher-paying jobs in America, it doesn’t destroy them.
We are not the only country that is using a lot more coal. Of all places, the New York Times reports that “Chinese companies are building or planning to build more than 700 new coal plants at home and around the world, some in countries that burn little or no coal. . . .” India is building hundreds more.
Will the coal industry survive as we proceed into the twenty-first century? Who knows? Trump has shown, though, that if government gets off the coal industry’s back, it can have a significant and beneficial effect on miners, manufacturers, and consumers. The reason so many nations are turning back to coal and natural gas is very simple: price and reliability. On both measures, fossil fuels are much more efficient than wind and solar power generation.
No one knows what the next big thing will be in energy. What is certain is that Washington bureaucrats certainly don’t know—as the Obama administration proved when caught by surprise by the shale revolution.
Perhaps the next big thing in energy will be micro-nuclear reactors that could be safe, affordable, and green (with no carbon emissions) sources of electric power production. Perhaps solar can finally emerge as an economically viable alternative, at least where there is a lot of sunshine. Wind turbines, due to intermittency, seem an unreliable source of energy for a modern world until storage technology dramatically improves. The best strategy going forward, and the one we see Trump adopting, is to let the market, not bureaucrats, dictate our energy future.
Keeping the Lights On
Two headlines from 2018 pay tribute to the success of Trump’s pro-America energy policies.
The first comes from the Wall Street Journal’s front page on January 18, 2018:
U.S. Oil Output Expected to Surpass Saudi Arabia, Rivaling Russia for Top Spot: Boosted by shale industry, rising U.S. production could undermine OPEC’s efforts to shore up oil prices27
According to the story:
U.S. oil production is expected this year to surpass Saudi Arabia’s output, upending a global pecking order that has been a basis for U.S.-Middle Eastern policy for decades.
Crude output in the United States will likely climb above 10 million barrels a day in 2018, which would top the high set in 1970, the International Energy Agency said Friday.
The second story appeared in Reuters in April 2018, and we couldn’t have written a better headline: “Trump’s revenge: U.S. oil floods Europe, hurting OPEC and Russia.”28
The story began:
As OPEC’s efforts to balance the oil market bear fruit, U.S. producers are reaping the benefits—and flooding Europe with a record amount of crude. . . . “U.S. oil is on offer everywhere,” said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing U.S. oil. U.S. oil output is expected to hit 10.7 million bpd this year, rivaling that of top producers Russia and Saudi Arabia.
This is the energy renaissance that Trump envisioned from the first time we met with him. Trump understood from the start that the American shale oil and gas revolution is only in its infancy. It will continue to be an economic and geopolitical game changer of epic proportions for decades to come.
Why is this so critically important to America’s economic future? Energy is the lifeblood of a nation’s economy. When it is abundant and reasonably priced, the economy prospers. According to the U.S. Energy Information Administration, the U.S. Geological Survey, and private think tanks like RAND, the resources in states like Alaska, California, Colorado, Texas, Utah, and many others, as well as under the outer Continental Shelf, are so bountiful that we could extract more than 1.5 trillion barrels of oil and approximately 3 quadrillion cubic feet of natural gas. This is at least 50 times the annual U.S. consumption.
Just to be clear: we are not talking about drilling in Yosemite or Yellowstone or, as President Obama once joked, on the National Mall next to the Washington Monument. The drilling would happen in not especially delicate areas.
According to one estimate from energy expert Jack Coleman, the output from drilling on federal lands could bring into the Treasury $1.5 trillion from oil and gas royalties charged to oil drillers and another $1.7 trillion in direct federal income taxes by the energy producers and their workers. Lease payments should raise nearly $40 billion, bringing the total revenues to above $3 trillion over 25 years and $10 trillion over 50 years. This estimate is very similar to an analysis performed in 2015 by experts at the Institute for Energy Research, who found that over the next 37 years, the oil and gas on federal lands could generate $4 trillion in federal revenues. And, of course, it would generate vastly more abundance, including many good-paying jobs, in the real economy.
This drilling strategy has just begun under Trump because the Obama administration’s anti–fossil fuel obsession created roadblocks to drilling permits and valuable energy infrastructure projects like new pipelines. It would make sense to dedicate a share of the trillions of dollars of revenue gains from drilling on federal lands to discovering ways to reduce the impact of carbon in the atmosphere through, for example, carbon-recapture innovations.
All this means that a pro-America energy policy can be designed in a way that helps pay for tax cuts, expands high-paying American jobs and growth, and is fully consistent with the imperative of environmental conservation.
As Trump once asked us: “What are the possible arguments against this?” It turns out that there aren’t really any.