President Trump is shaking up lots of sectors of the U.S. and global economies, but perhaps none more than energy production and regulation. So he is keeping CEOs on their toes at energy producers and at companies whose fates are closely tied to the sector, including automotive concerns.
Among his first executive actions, for instance, were decisions to take the long-delayed Keystone XL and Dakota Access oil and gas pipelines out of the mothballs where they were being held and authorizing their completion. Over the objections of environmentalists and others, CEOs now expect these projects to bring Canadian oil to new connection points in the U.S. Great Plains, with the goal of augmenting domestic energy security.
President Trump also has demonstrated a willingness to buck other Obama-era environmental restraints. For example, he just met in Michigan with the CEOs of several auto companies and promised to reopen a review of vehicle-emissions standards that long have been the subject of complaints by the industry.
Automakers want a break from standards that require them to sell vehicles averaging 54.5 miles a gallon by 2025—levels which they say don’t reflect reality in an era of cheap gasoline and soaring sales of higher-emitting and fuel-thirsty pickup trucks and sport-utility vehicles.
“We are going to ensure that any regulations we have protect and defend your jobs and your factories,” Trump said in Michigan while General Motors CEO Mary Barra, Ford CEO Mark Fields, Fiat Chrysler CEO Sergio Marchionne and Toyota’s North America CEO, Jim Lentz, looked on, as well as United Auto Workers President Dennis Williams.
Some CEOs favor a new gasoline tax as a way to discourage consumption of fossil fuels. Gas prices remain low, and “this would be a perfect users tax which could fluctuate to keep gas at a fixed retail price,” Jeff Kiesel, CEO of Restaurant Technologies, told Chief Executive. “We could adjust to higher fuel prices.”
But Trump has created more uncertainty with his approach to the biggest long-term issue affecting the energy industry: his stance on global warming. He has expressed skepticism about man-made climate change and has been critical of the Paris Agreement that President Obama signed in December, which made the United States a signatory to voluntary limits on emissions. The U.S. and 194 other countries agreed to limit the increase in global temperatures to two degrees Celsius, and to just 1.5 degrees Celsius if possible.
Regardless of the extent of culpability of mankind in climate change, Trump is concerned about the potential loss of sovereignty by the United States because of the Paris agreement. On the other hand, should President Trump move to pull the United States out of the accord, the nation could be subject to punitive actions by other signatories in the form of tariffs and other measures.