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

2. 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

3. 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?

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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.

11. 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