Donald Trump has been a figure of controversy since his election campaign started in 2016. Now placing a renewed emphasis on fossil fuels over renewables, he has given the go ahead to construct a petroleum pipeline which will transport 108,000 barrels of gasoline/diesel per day when completed.
The potential implications of this are uncertain, but it is likely to attract both support and criticism from a number of different groups. Here are some of the potential implications.
Value of Oil
Having fallen from around $100 per barrel in 2014 to just $44 (at time of writing), oil has showed very few signs of recovery of the last months/years. This is largely due to oversupply, and Trump’s pipeline will do nothing to ease this problem.
The construction of this pipeline is part of Trump’s bid to supply America with the cheapest energy sources possible, regardless of the potential environmental impacts. This may help businesses and individuals across America save money on fuel, but it is also likely to drive oil prices down in an already oversupplied market.
It seems that trump is intent on focusing on policies which promote isolationism, whilst disregarding criticisms over the potential global impacts which his policies might have. Oversupply is now likely to continue for the foreseeable future, and there is no telling what the potential knock on effects of this might be to the global economy.
As an economic powerhouse, the US has a lot of power to aid OPEC’s mission of restricting supply and pushing up prices. However, oil producers are consistently finding ways to push their prices down to stay competitive, and this pipeline will further exacerbate the problem.
This is making OPEC’s mission a seemingly impossible task, especially with other countries like Nigeria and Libya constantly pumping out more oil. It is hard to see how the situation will improve in the near future, with little cooperation happening between oil producing countries.
The pipeline will, however, create more jobs in the US, and is likely to help stimulate the economy overall. Although there is no telling what the oil situation will be like when the pipeline is completed, there could well be similar endeavours by the Trump administration as part of their efforts to shift focus away from renewables.
If the pipeline proves to be successful and increase job supply, then it could well drive up appetite for more similar projects in America. It remains to be seen, however, how the climate conscious global community will react to Trump’s furious enthusiasm for oil.
The construction of this pipeline will bring more uncertainty than answers, as Trump’s decisions become increasingly controversial. With the value of oil currently suffering from a major slump, greater oil production is unlikely to help the problem.
It will, however, make energy cheaper in America, which could benefit businesses and individuals alike. For now, though, oil investors will most likely be holding back until the potential effects of this move on the oil markets becomes clearer.
Those trading oil as a global commodity through methods like spread betting will no doubt be keeping an eye on the market as this news spreads across the world. Markets are notorious for reacting to news like this, with traders speculating on the potential impacts it could have on the value of global oil prices.