Trump's Recklessness on Energy

Trump's Recklessness on Energy
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Donald Trump’s comments on energy during this campaign season have been sparse. But apparently off-the-cuff statements the past few weeks on environmental protection and Saudi Arabia have been real blockbusters.

In a Fox News debate late last month, the frontrunner for the Republican nomination for president said that, if elected, he planned to virtually eliminate the Environmental Protection Agency. Created under Republican President Richard Nixon in 1970, EPA has generally been able to count on fairly bipartisan support. Though GOP attacks in recent years gotten considerably shriller, no previous American political candidate has ever gone so far with an environmental position anywhere near this extreme.

A reasonable observer might conclude that the United States is beating the socks off China in providing clean air and protecting the lungs of its citizens. With China now adopting tough new initiatives to address its severe air problems, Trump pledges, in effect, to make America dirty again and unravel an American system that has been the envy of much of the world.

Trump told reporters from the New York Times several days ago that he would end U.S. purchases of oil from Saudi Arabia unless the Saudis committed more funds to U.S. military operations in the Middle East. A good discussion of how to allocate the costs of defending the region against aggression would certainly be in order. The last three administrations have paid less attention to this issue than previous ones. But the Trump approach demonstrates a lack of understanding of international oil markets.

Unilateral boycotts hardly pose a major threat to oil exporters. The embargo on Iran’s oil worked because it was supported by most of the oil-consuming nations. In the case of Saudi Arabia, its oil would end up being diverted elsewhere, while we would probably buy oil we needed from the sellers who were displaced by the Saudis. To the extent the Saudis had difficulty finding the right refineries for their grade of oil, our refiners would have similar challenges getting the correct match. In sum, there would be inefficiency added into the global trade of oil, but things would still get worked out.

We have limited our markets to foreign suppliers before (during the Depression and from 1959 to 1973) and, in many respects, the actions ended up backfiring on us. The founding of OPEC itself was, in part, a response to the decision by President Dwight D. Eisenhower – under pressure from protectionist oil-patch Democrats and worried about the national security implications of dependence on foreign oil – to impose import quotas. Trump argues we are in a better position to reject foreign oil because of rising U.S. production, but there are no immediate prospects that we do without any imports, particularly when low prices are reining in U.S. exploration and development.

In addition, we would be accepting oil from Iran but not from Saudi Arabia – a symbolic act probably not in America’s best interests. What sort of message does it send to that region of the world when a leading presidential candidate says we are willing to contemplate the fall of an ally of many decades? Does Mr. Trump have an alternative government in mind? Why can’t discussions about military costs take place in private, where they might be more productive and less disruptive to the relationship?

Added to his threat to place punitive tariffs on imports from China, Trump’s position that the government in Washington should tell oil refiners who they can buy crude from (in the absence of an international approach that might actually produce results) raises questions about how far the federal government should go in constraining private commerce. The government should be the final arbiter on American foreign policy, but it is hard to justify penalizing American businesses and consumers when the proposed actions may do more harm than good.

Environmental policy and foreign policy are like chess games in which an American president gets to move pieces, but other people do as well. It would be encouraging to see the energy game thought out more moves in advance, in case the blustery tweets and interview sound bites of the campaign trail make it all the way to the Oval Office.

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