Pres. Donald Trump took office Jan. 20, 2025, and promptly declared “a national energy emergency” intended to speed the permitting of oil and gas production, invoking the National Emergencies Act of 1976 in doing so.
In this instance, Pres. Trump directed the heads of Federal agencies “to identify and exercise any lawful emergency authorities available to them” to facilitate the leasing, siting, production, and generation of domestic energy sources including on federal lands, citing an artificial intelligence race with China. Or as one White House official put it, “our ability to produce domestic American energy is so crucial such that we can generate the electricity and power that’s needed to stay at the global forefront of technology.”
Tariffs would directly undermine energy affordability and availability while eroding the US oil and natural gas industry's competitiveness.
- American Petroleum Institute
In addition to the emergency declaration, Trump took steps to withdraw the US from the Paris climate accords, revoked actions that barred drilling in large parts of US coastal waters and the Arctic, and ordered the Department of Energy to resume processing export permits for proposed LNG projects.
“The United States’ insufficient energy production, transportation, refining, and generation constitutes an unusual and extraordinary threat to our Nation’s economy, national security, and foreign policy. In light of these findings, I hereby declare a national emergency,” said Pres. Trump in the declaration.
The US is already the largest producer of crude oil and natural gas in the world. The companies extracting these commodities are generally producing as much as they want to be. There are bottlenecks getting this output from wellhead to market and whatever can be done to alleviate this should be.
The US and China have the world’s largest refining capacities, with no other country a close third. US capacity is more advanced (i.e., cleaner, more efficient, and more flexible). And despite consuming more refined products than any other country, the US has been a net exporter of them since 2011. Power generation is outside the scope of OGJ’s coverage but it’s commonly recognized that the grid through which power flows is in desperate need of both upgrade and expansion.
Leave tariffs out
If domestic crude oil output is boosted significantly and the price at which producers can sell it here goes down, the companies involved will simply seek other markets. Are they to be prohibited from doing so? Tariffs could ‘help’ by artificially boosting the price of foreign oil. Canadian producers are already maximizing shipments to the US to get as much oil as possible south before tariffs begin. Maybe that’s the grand plan; build a price shield around domestic production so that even as it grows there’s only so far prices can drop.
Reciprocal tariffs by other countries would make crude, a global commodity, more expensive still. In fact, the American Petroleum Institute has noted that the imposition of tariffs on oil, gas, and refined products would “directly undermine energy affordability and availability for consumers while eroding the US oil and natural gas industry’s competitiveness both domestically and globally.”
The industry achieved its current heights under the onerous yoke of the Biden administration and could perhaps become stronger still given the desires of its successor. But it’s only going to have a chance of doing so if the companies involved can continue to do business in the manner to which they’ve grown accustomed: in a stable environment with minimal constraints on their actions, not by being put through the market equivalent of an untested Rube Goldberg machine.
Oil and gas should be cut out of any pending tariff schemes.