One of Donald Trump’s main initiatives, voiced even before his official inauguration, was to increase the production of American hydrocarbon resources – oil and gas. How feasible are the grandiose plans of the American president and what could prevent their implementation? This is one of a series of Igbal Guliyev and Sergey Volgin’s reflections on Trump’s energy policy.
It’s already commonplace for the headlines of reputable news outlets to feature loud and shocking statements from the new American president. Most of Donald Trump’s proposals and initiatives concern the foreign economic dimension of American policy. The attention of the world community is currently focused on the uncertain future of Greenland, the inclusion of which will allow the United States to significantly expand its Arctic zone and obtain a large hub for future Arctic operations, the possible annexation of neighbouring Canada, whose icebreaker fleet can significantly strengthen the American Coast Guard, the introduction of unprecedented foreign trade tariffs and, of course, the high-profile deal on rare earth metals with Ukraine, the conclusion of which was announced by the 47th President of the United States.
However, the Republican administration intends to carry out no less important and fundamental changes within the United States itself. Not least of all, this concerns Trump’s new approach to the energy sector of the American economy: the establishment of the National Energy Dominance Council, the introduction of a State of Emergency in the field of energy on the very first day of Trump’s stay in the White House, a new initiative to stimulate oil and gas production, the return of coal as one of the main resources for American energy and much more. But are the grand plans of the new American president so feasible, and what or who exactly can prevent their implementation?
Drill, baby, drill!
One of Donald Trump’s main initiatives, voiced even before his official inauguration, was to increase the production of American hydrocarbon resources, such as oil and gas. “We will drill, baby, drill!” Trump said in his inaugural speech. On his first day in the White House, the newly elected US president signed an executive order declaring a state of emergency in the local energy sector. As if echoing Trump’s campaign rhetoric about the short-sighted and unprofessional policies of the previous Democratic administration, which threatened to lead to an “energy catastrophe” in fossil fuel production, the text of the decree directly states “Our Nation’s current inadequate development of domestic energy resources leaves us vulnerable to hostile foreign actors and poses an imminent and growing threat to the United States’ prosperity and national security.” The expanded powers acquired after the declaration of a state of emergency by both the president himself and the heads of the relevant executive departments make it possible to significantly increase the possibilities for implementing the domestic energy policy outlined by Trump.
On the same day, January 20, the 47th President of the United States signed another executive order, titled “Unleashing American Energy” and affecting the sphere of extraction of non-renewable resources. Its text also refers to the direct correlation between the historical prosperity of America and the need for the maximum extraction of natural resources from the depths of American soil. In this regard, according to the executive order, all authorised agencies and companies involved in the extraction of energy resources are required to review their strategies, plans and priorities in order to avoid burdensome obstacles that hinder the use of US domestic energy resources. The Republican administration’s order pays special attention to oil, natural gas, coal, hydropower, biofuels, critical mineral and nuclear energy resources.
At first glance, it may seem that Trump’s tough and consistent policy aimed at increasing the volume of production and export of American fossil resources should certainly be popular among the owners and management of oil and gas companies in the United States. However, despite the initial cautious optimism expressed by American businesses regarding the new White House policy, the situation that has developed in the US oil and gas sector after 100 days of Trump’s presidency can hardly be called a major success. The fact is that in order to increase the volume of oil and gas production, and, consequently, to carry out geological exploration activities, discover new fields, build logistics and find new customers, the American domestic energy market needs incentives in the form of higher prices for the resources themselves. American companies will not increase oil and gas production, which, by the way, is already at a record level in recent decades, without making sure that they will receive additional profit from this. However, raising oil and gas prices runs counter to the very essence of Donald Trump’s domestic energy policy and his loud campaign slogans.
However, Trump’s policy of improving the American economy by imposing tariffs on imports from other countries has complicated the implementation of the “Drill, baby, drill” policy. The tariffs imposed by the Trump administration in order to normalise the trade balance and expand industrial production in the United States have hit fossil fuel prices quite hard. Not only have oil prices failed to rise, but they have fallen by a significant percentage compared to the beginning of 2025. Since Trump took office, crude oil prices in the United States have fallen by 20 percent and currently stand at just under $65 per barrel. In addition, the shares of large American oilfield services companies that provide services for the exploration and production of fossil fuels have fallen significantly later than the Republican administration introduced tariffs. For example, Baker Hughes and SLB shares have fallen by more than 20 percent since January 2025, while Halliburton shares have fallen by 32 percent.
And yet, fossil fuel prices are not the only factor that could hinder Donald Trump’s plan to increase oil and gas production. According to surveys conducted by the Federal Reserve Bank of Dallas in the first quarter of 2025, when asked “what price of WTI crude would your company be willing to pay to drill a new well profitably?”, the numbers ranged from $61 to $70 per barrel. These data indicate that the American oil and gas business is afraid not so much of the current relatively low prices for energy resources, but of the negative dynamics of their price growth in the long term. Another consequence of the introduction of customs duties was an increase in prices for the equipment necessary for the construction of new oil and gas energy infrastructure facilities and the renovation of existing ones. Some oil and gas companies at the beginning of Donald Trump’s presidential term decided to purchase the necessary equipment in advance, including steel pipes and casing strings, fearing a jump in prices for these types of materials after the introduction of American customs duties.
Pipeline hub
It is worth noting that Trump’s statements related to the pipeline business have caused particular enthusiasm in the oil and gas industry. During the Democratic administration of Joseph Biden, many pipeline companies were forced to go through several courts, defending certain pipeline projects and being in constant uncertainty about their future prospects in the United States. Sometimes, under the influence of various environmental organisations, permission for their construction was completely suspended by court order, as happened in October 2024 in the state of Tennessee.
Unlike his first presidential term, Donald Trump has not yet paid special attention to pipelines in the form of special executive orders. However, the 47th US President has expressed some initiatives in this area. Trump focused primarily on promoting the long-suffering Constitution Pipeline, which would have provided New York and New England with cheaper energy from Pennsylvania. However, its construction was cancelled in 2020 due to a campaign by then-Democratic New York Governor Andrew Cuomo, who insisted that the pipeline did not comply with Section 401 of the Clean Water Act. By his second presidential term, Donald Trump had prepared a more sophisticated plan of action to finally resolve the issue of pipeline construction in the northeast. Declaring a national energy emergency on his first day in the White House was the very step that could circumvent Section 401 of the Clean Water Act; the US Army Corps of Engineers was given “maximum emergency authority” under Trump’s directive to build pipelines in the Northeast. Despite the boldness and decisiveness of the Republican administration’s actions, the declaration of a national energy emergency has invited a host of lawsuits, and the relevant new law dedicated to the use of the US Army Corps of Engineers has provoked a sharp reaction from environmental activists and the Democratic politicians who support them. In addition, the CEO of Williams Cos., the company that previously built the failed pipeline and which lost hundreds of millions of dollars in 2020, said the company would not take on the project unless they were invited to do so “with the red carpet rolled out.”
Another ambitious pipeline project that has caught Trump’s eye is the Keystone XL oil pipeline. The KXL project itself is an addition to the existing Keystone pipeline, which connects the Canadian oil sands to US refineries. Initially, the project was cancelled by President Obama, then in 2017 Donald Trump offered the Canadian company TC Energy to resume construction of the pipeline. However, in 2021, the newly elected Democratic US President Joseph Biden again cancelled the construction of the KXL, which became the subject of an ongoing lawsuit to recover $1.3 billion from the American side.
Now Donald Trump has once again raised the issue of the need to implement this project. However, Canadian business has made it clear that no one is going to repeat the same mistake for the third time without certain guarantees. Moreover, Trump’s proposals regarding the need to resume construction of the KXL sound rather strange against the background of his rhetoric towards Canada and the introduction of customs duties against its northern neighbour. However, it cannot be ruled out that in the future, if relations between the US and Canada are normalised, the former British dominion will be able to use the KXL project as a bargaining chip when discussing trade and economic relations with the United States and resolving the consequences of the latter’s introduction of customs duties.
