US President Donald Trump's strategy to expand domestic energy production and exports – by fast-tracking permits, easing climate regulations and introducing tax cuts – will encounter major hurdles, experts say.
These challenges include changing market realities, as well as Mr Trump's own policies, such as rolling back the Inflation Reduction Act (IRA) and initiating trade wars with China and key allies, they suggest.
Following the declaration of a national energy emergency last month, the US Army Corps of Engineers has released data identifying more than 600 potential infrastructure projects, primarily within the energy sector, that may receive expedited review.
At the Future Investment Initiative Priority Summit in Miami on Wednesday, Mr Trump proposed cutting taxes for US oil and gas producers and allowing companies to expense 100 per cent of investments in domestic factory construction and other capital expenditure.
“The energy dominance agenda starts at home and it is already an uphill struggle against market dynamics,” said Francesco Sassi, research fellow at Ricerche Industriali Energetiche in Bologna. "Trump wants less state intervention and more market influence in shaping the energy strategies of American oil and gas giants."
He promises tax cuts for producers, nudging some to favour the domestic market, “but what if the biggest opportunities lie abroad? Would they quietly accept trade barriers and US isolation?”
Mr Trump’s return has been a mixed bag for energy industry players so far, with tariff threats against Canada and Mexico – the largest suppliers of crude to the US – a move that will shrink margins for American refiners and force them to source crude from other markets.
Meanwhile, most US oil producers are not planning to boost output unless oil prices rise significantly.
“With US shale companies focusing on capital discipline, there are two ways that crude production could grow a bit faster – via a sustained oil price increase or via lower production costs,” Giovanni Staunovo, strategist at UBS, told The National.
Potential tax cuts will create “room to cut costs”, depending on their magnitude, said Mr Staunovo, who has maintained his US crude growth forecast at 300,000 barrels per day (bpd) this year despite recent developments.
This month, the US Energy Information Administration raised its forecast for 2025 domestic oil production to 13.59 million bpd, up from its previous estimate of 13.55 million, citing improved efficiency.
Oil prices have retreated from the highs reached after the Russia-Ukraine war, as western sanctions largely redirected Russian crude flows to the East, particularly China and India.
Dismantling IRA
Last month, the Trump administration ordered federal agencies to “immediately pause the disbursement of funds” under the Inflation Reduction Act, former President Joe Biden’s landmark legislation.
The future of numerous major clean energy projects, which were counting on federal funding and tax breaks, is now unclear.
The IRA also incentivised US oil and gas companies to invest in technology promoted by the legislation.
ExxonMobil’s planned blue hydrogen plant in Baytown, Texas, is expected to reach a final investment decision (FID) this year. The UAE’s Adnoc took a 35 per cent stake in the project last year and plans to transfer that stake to its subsidiary Fertiglobe.
“We're obviously monitoring the geopolitical and regulatory environment right now,” Ahmed El Hoshy, chief executive of Fertiglobe, told The National in an interview last week. "For now, we see that things look like they're still fine in terms of the IRA and what's needed there. We'll be working with our partner ExxonMobil on the FID plans for the project over the next several months."
Occidental Petroleum, a major oil and gas company based in Houston, is lobbying the Trump administration to keep tax credits that support carbon capture and storage, as their first plant is scheduled to begin operations this year.
"President Trump knows the business case for this, I've had several conversations with him," said Vicki Hollub, the company’s chief executive.
LNG impact
Last month, Mr Trump issued an order for the US to resume processing export permit applications for new LNG projects, reversing a ban placed by the previous administration.
However, even as the policy shift aims to boost American LNG exports, escalating trade tension with China threaten to undermine demand.
China’s retaliatory tariffs on US LNG, imposed in response to a 10 per cent tariff on Chinese goods, along with the prospect of an all-out trade war between the two countries, will make Chinese companies cautious about signing new long-term contracts with American LNG projects, analysts say.
Even without the effects of a trade war, increasing the supply of the supercooled fuel to the market will still take years. It typically takes two to five years after the FID for a facility to send out its first commercial shipment.
Future US LNG faces financing uncertainties, ship construction delays and Henry Hub-linked pricing, which makes it less competitive than Qatari LNG, Ruchdi Maalouf, independent arbitrator and a former LNG executive, told The National.
“Increasing gas production can happen fairly quickly, but building a new liquefaction plant takes us beyond Donald Trump's term. There are so many unknowns that it is hard to speculate,” he said.
Norway-based consultancy Rystad Energy had earlier predicted that Mr Trump’s pro-energy agenda could help nearly double US LNG export capacity to 22.4 billion cubic per day (bcfd) in 2030, from 11.3 bcfd in 2023.
Opec policy
At the FII summit, Mr Trump thanked Saudi Arabia for hosting talks between Washington and Moscow last week, describing the kingdom as a “special place with special leaders.”
Saudi Crown Prince Mohammed bin Salman has vowed to invest $600 billion in the US over the next four years.
The US President’s remarks followed his call this month for Opec+ to increase crude production, as the US tightened sanctions on Iranian and Russian exports. However, the group left its production policy unchanged at its meeting on February 3.
The Opec+ group, which includes Russia, has withheld 5.86 million bpd of supply from the market, including voluntary output cuts of 2.2 million bpd that will be gradually eased, starting in April.
“We expect sanctions to force Iranian production lower later this year while the potential impact on Russian supply remains uncertain,” Energy Aspects said in research note last week.
Despite US pressure to increase output, Opec+ is expected to maintain current production levels until at least April without “sustained clarity” on sanctions, the consultancy said.
Earlier this month, Iranian President Masoud Pezeshkian urged Opec members to unite and prevent the US from pressuring any of them.
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Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
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The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
The specs: McLaren 600LT
Price, base: Dh914,000
Engine: 3.8-litre twin-turbo V8
Transmission: Seven-speed automatic
Power: 600hp @ 7,500rpm
Torque: 620Nm @ 5,500rpm
Fuel economy 12.2.L / 100km
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The specs
Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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Afghanistan fixtures
- v Australia, today
- v Sri Lanka, Tuesday
- v New Zealand, Saturday,
- v South Africa, June 15
- v England, June 18
- v India, June 22
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Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
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'Joker'
Directed by: Todd Phillips
Starring: Joaquin Phoenix
Rating: Five out of five stars
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Tips for newlyweds to better manage finances
All couples are unique and have to create a financial blueprint that is most suitable for their relationship, says Vijay Valecha, chief investment officer at Century Financial. He offers his top five tips for couples to better manage their finances.
Discuss your assets and debts: When married, it’s important to understand each other’s personal financial situation. It’s necessary to know upfront what each party brings to the table, as debts and assets affect spending habits and joint loan qualifications. Discussing all aspects of their finances as a couple prevents anyone from being blindsided later.
Decide on the financial/saving goals: Spouses should independently list their top goals and share their lists with one another to shape a joint plan. Writing down clear goals will help them determine how much to save each month, how much to put aside for short-term goals, and how they will reach their long-term financial goals.
Set a budget: A budget can keep the couple be mindful of their income and expenses. With a monthly budget, couples will know exactly how much they can spend in a category each month, how much they have to work with and what spending areas need to be evaluated.
Decide who manages what: When it comes to handling finances, it’s a good idea to decide who manages what. For example, one person might take on the day-to-day bills, while the other tackles long-term investments and retirement plans.
Money date nights: Talking about money should be a healthy, ongoing conversation and couples should not wait for something to go wrong. They should set time aside every month to talk about future financial decisions and see the progress they’ve made together towards accomplishing their goals.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
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