NS4960 Spring Term 2018 President Trump’s Vision of Energy Security Panama Key issues 2016 Inclusive Growth in Panama

Overview President Trump’s Vision of Energy Security, Milken Institute Review, February 27, 2017 President Trump – Major reversal of many of President Obama’s Energy policies, and Represents a different approach toward energy security History Energy security not discussed much until the 1970s Energy independence slogan of the Nixon administration Discussion tapered off with the 1986 oil price crash

Energy Independence Is energy independence possible? Oil traded in global markets Supply disruptions anywhere translated into higher prices around globe Is energy independence a good policy? Benefit of trade is to take advantage of low prices Reliance on just US production would result in higher energy prices and costs Independent in what sense – just oil or energy in general?

OPEC Pricing Will OPEC always charge high prices? OPEC must strike a balance that inhibits cheating OPEC must also be mindful of the oil reserves of non-member countries and their cost of production Members with very large reserves (Saudi Arabia) are aware of the risk that a very high price will Accelerate conservation Stimulate innovation and Encourage greater use of alternative fuels

Shale Revolution With new sources of oil from shale – fracking revolution –U.S. imports of oil fell to less than one third consumption in 2016 Trump administration has gone back to the goal of energy independence with “full use” of our domestic resources Implies (at a minimum) Opening Atlantic Continental Shelf and Arctic to oil drilling Fast tracking oil and gas extraction on federal lands Keystone XL pipeline approved

Economic Nationalism President Trump mixes ideas of economic nationalism with older ideas of energy security Would like to see the U.S. a “net energy exporter” Problem No particular reason to be energy independent in a world in which oil trades freely and Changes in supply and demand are reflected in prices Nothing needs to be changed to meet this target According to US Energy Information Agency market forces technology and policies in place have already put the U.S. on track to be a net energy exporter by 2028

Sustainable Growth Last section of President Trump’s energy statement is that the growth in energy production will be sustainable in terms of environmental quality Contradicts campaign that environmental regulations on fossil-fuel industry should be rolled back – which they have been by executive order Hard to see how the President’s proposals will improve environmental quality Restrictions on coal use will be lessened

Current Thinking I Economically sophisticated view of energy security required broader vision that Recognizes how we use and depend on energy Takes into account vulnerabilities to weather events, disasters and terrorism Should be tied to electricity and natural gas as much as oil, and Redefines security as much by resilience to non-market shocks as by availability at reasonable cost This definition was codified at a 2014 meeting of the G7

Current Thinking II Also echoed in the Fixing America’s Surface Transportation Act (FAST) passed by Congress in 2015. Main features include Oil, gas and electricity – consider security of energy system as a whole Maintenance and development of flexible, transparent and competitive energy markets When markets in energy are working efficiently resources flow to the most productive sectors Diversification of supply Traditionally idea was to diversify oil imports as a hedge against embargo Come to mean diversification of fuels to perform a given function such as electricity or natural gas to propel vehicles

Current Thinking III (comprehensive approach contd.) Reducing greenhouse gas emissions Recognizes that reducing the risks associated with climate change – storm intensities, sea level rise and higher temperatures reduces the risks of blackouts, and oil and gas interruptions Enhancing energy efficiency Standards for fuel mileage Promoting development and deployment of clean renewable energy technologies Federal government research and financial support through tax incentives in technologies that increase fuel diversification and reduce the climate consequences of energy use.

Current Thinking IV (comprehensive approach contd.) Assessment Both Improving reliability and hardening to threats from physical and cyberattack, weather and disasters Improving emergency response Assessment Both Old version of energy security as self-sufficiency, and The President’s variety as export strength Are flawed There is a far more inclusive security paradigm America first offers nothing constructive to the debate on energy security and may turn out to be counterproductive