What Explains Trump’s Energy Policy?

There’s no plausible economic explanation. It’s all about politics.

Trump’s energy policy rests on promotion of U.S. fossil fuel production and use. The instruments include orders forcing coal-fired generators to keep operating, relaxed air pollution standards for power plants, and repeal of as many energy efficiency standards as possible. Not to mention trying to block renewable energy project wherever and however he can.

Trump’s overall economic policy centers on mercantilism, the belief that countries get rich by exporting more than they import.  That fits pieces of his energy policy but not others.  There’s also some rhetoric about free choice by consumers, but Trump clearly is not a believer in free markets as a matter of principle.  The remaining explanation is political: certain policies are more favorable to industries identified with Republican interests.

On top of this, there may be a sense that fossil fuels are more High Testosterone than renewable energy, although it’s hard to pin that motivation down.  If Pete Hegseth would, he’d no doubt make energy generators take testosterone tests.  Short of that, he’d surely find that dangerous occupations like coal mining and hot, noisy generators are more masculine than solar panels.

Putting aside the Administration’s nineteenth century view of masculinity, let me turn to the possible economic justifications, beginning with mercantilism, the basis for the sweeping tariffs that have been the core of his economic policy.  That could explain a desire to remove barriers to oil production to boost exports.  But it doesn’t fit with Trump’s opposition to fuel efficiency standards.  Fuel efficiency standards for U.S. cars make perfect sense from a mercantilist point of view.  They free up oil from U.S. consumption and make it available for export.  So, Trump should favor them on mercantalist grounds.  Oil companies, not so much. They make more money from domestic sales because they avoid the extra international shipping costs, so having a lot of gas guzzlers in the U.S. is good for business. Thus, repealing fuel efficiency standards is good for oil companies, but bad for the country in mercantilist terms.  Interest group favoritism trumps mercantilist economics.

What about freedom of choice? This free-market principle is inconsistent with high tariffs, whose entire purpose is to limit consumer choice to favor local industry. Why shouldn’t U.S. consumers have the option of buying Chinese EVs, which are cheaper and reputedly superior in quality? Or Chinese solar panels, which are also cheaper? Other Trump energy policies also violate free-market principles.  The Administration is forcing unwilling utilities to operate or purchase power from coal-fired powerplants, which is anathema to free market principles. It is also blocking wind and solar projects, despite the existence of willing buyers for their power.

These anti-renewables policies are also anti-mercantilist. By increasing electricity prices, they make U.S. exports less competitive in electricity-intensive industries. Again, however, these policies profit favored industries by eliminating competitors to fossil fuels and supporting the uneconomic but Republican-connected coal industry.

There may be some more complicated theory to explain Trump’s energy strategy, but the simplest one is that it is designed to favor certain industries for political reasons. Fossil fuel industries have along been major supporters of the Republican Party, and they bring jobs to rural areas that are Republican strongholds.For years, coal magnates and Big Oil have been locked in an embrace with the GOP, providing a steady stream of financial support.  And fossil fuel extraction is (or in some cases, was) a major source of employment in Red States from Texas to West Virginia. Sometimes the obvious answer is the right answer: it’s all about politics, not policy.

Climate Politics, coal, electric vehicles, energy policy, environmental politics, fossil fuels, Oil, regulatory policy, renewable energy, tariffs, Transportation, Trump Administration