There have been plenty of speculations surrounding the ascension of the Trump administration to the White House with regard to the scheduled policies which would influence the sizeable oil and gas industry of the United States. Now that the per barrel cost of crude oil has treaded past the formidable impasse forged by the relentless price cutting by the OPEC and had reached a three year high of $70 per barrel (as of January 2018); there is an outpour of optimistic attention to the oil and gas industry. With the ease of the sanctions on Iran along with the OPEC-Russia deal and the immense potential oil reservoirs recently discovered around Scottish and South African coast lines, the dynamics of the oil industry have shifted from the once lethargic deadlock to an increasingly volatile domain. This significant change renders the North American countries a new opportunity to put their reservoirs to active use, given the current viability of the operation due to the increase in oil prices. For shale gas—or north american hydrocarbon reservoirs in general—to be viably extracted, the per barrel cost of oil was required to be in the vicinity of $60 per barrel. Consequently, the change from the Obama to the Trump administration was regarded as a significant factor impacting the petroleum industry paradigm.
Under the Obama administration, the Bureau of Safety and Environmental Enforcement (BSEE) had imposed a strict ban on any sort of offshore drilling or exploration along the coastal regions of the United States. This included the Beaufort Sea and the territorial arctic waters surrounded by the Alaskan coastline. The motive behind this strict imposition was to avoid the extreme potential ecological destruction and the maritime life hazards. The regulations were passed following an executive order by President Obama. Following the power transition, and the resurgence of the oil industry, the Trump administrations decided to ‘undo’ the regulations passed under the preceding government. More specifically, BSEE plans to re-open almost all the coastal regions and sea waters to oil explorations and drilling. The new regulations brought an array of reactions from public; for some, the regulations meant disproportionate ecological hazards, along with adverse effects on industries which depend on unadulterated and preserved maritime waters, or at worst, another Deep-Water-Horizon-like catastrophe. To others, the regulations appeared to be a step towards attaining a bigger share of global oil and gas market.
Pertaining to the eastern coastline and the Gulf of Mexico, local governments seem highly skeptic of the impending regulations. A severe rebuke was presented by the Republican governor of Florida, Rick Scott, who put forth grave concerns regarding the harmful impact of the mandate on the tourism industry of Florida. Scott also accused the Trump administration of holding a bias in favour the petrochemical industry. Similar concerns have been voiced from various other representatives of the coastal states. Tourism in California, Virginia and Louisiana is a huge contributor to their GDP. Even if the regulations promise a higher economic return to the country, on a state level the optimism is evidently not mutual. Premiers of other coastal states including New York and Maine have denounced the administrations stance based on the fact that the annual revenue of these states rely heavily on the maritime fishing industry, which is critically threatened by exploration and drilling operations. The unanimous opposition to the regulations gives a clear perspective of the potential repercussions. The governor of California went as far stating that the crude obtained from the offshore drilling in the US would be promptly boycotted by the economically wealthiest state in the US.
According to the US Geological Survey (USGS) the arctic circle encompasses nearly 240 billion barrels of proven oil reserves. Furthermore, 25 percent of all the oil reserves in the world lie underneath the relatively unexplored regions of the Arctic ocean. For the US, this vast stretch of prodigious resource could hold the key to a higher—and much yearned for— share of the global industry. As a consequence, earlier this year Italian oil giant ENI was granted permission to kick off exploratory drilling operations. The undisputed fact here is that following the economic boom in China and South Asia, the demand for energy has increased exponentially. Hence, the Trump administration’s neglect towards the potential consequences of the continuation of drilling operations could very well be just a faulty inferred causality, as in the current soaring global situation of energy demands, the advents for further exploration and the risks associated with it were ultimately inevitable, regardless of the incumbent administration.
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