Donald Trump has made another call to end restrictions on fracking.
Donald Trump promised to lift environmental regulations, open federal lands to oil and gas production and ease permitting for oil pipelines during a speech at a fracking conference in Pittsburgh on Thursday in which he accused Hillary Clinton of wanting to kill the energy industry.
“I am going to lift the restrictions on American energy and allow this wealth to pour into our communities — including right here in Pennsylvania,” Trump told shale industry leaders. “The shale energy revolution will unleash massive wealth for American workers and families.”
But what Trump is selling the voters of Pennsylvania is a pipe dream. Literally. The oil shale boom is over, and there’s no clearer sign than this: In just the last two years, more than 100 oil companies have gone bankrupt.
The total number of North American oil and gas producers to file for bankruptcy since the beginning of 2015 is now at 102. The total secured and unsecured debt for those filings is approximately $67.8 billion.
Why? Not because of regulations. Not because of anything that President Obama, or the EPA, or state governments did to get in their way. Oil and gas companies are failing because there is too much oil and gas.
The evidence of this is visible every time you pull up to the gas pump. The same period where companies have been failing is the period of absolute glut on the market which has kept fuel prices hovering around $2 a gallon. The 102 companies that have filed for bankruptcy so far are only a fraction of those hovering on the edge. And that’s not even counting the hundreds of drilling companies, pipeline companies, and well service companies they’re taking down with them.
The bursting of the fracking bubble comes with a big cost. And it’s not too little fracking that the industry is mad about. Many in the industry are upset that President Obama has allowed too much fracking.
Employment in the energy industry was highly sought after at the height of the boom that pulled prices at the pump down to $2 a gallon. Now, an estimated 350,000 people have been laid off globally. Of these, 99,000 were fired in Texas alone. These are people who, like their bosses, are highly unlikely to be in the mood to give thanks to the President, whose administration has nurtured the fracking that made the shale revolution possible.
None of that means that the industry won’t lurch toward Trump and his promise of no regulations. Of course they will. No regulations is a shiny, shiny bauble, and it’s irresistible to the hundreds of companies that think they only have to “outlast the other guy” to own the market. The trouble is that everyone is making that bet, and not just in the United States. The whole market is engaged in not just a race to the bottom, but a contest to hold their breath until their competitors go away.
However, this is exactly the kind of market that constantly lures in fresh money that thinks Boom 2.0 is just around the corner. The contest is also being nearly infinitely prolonged by bankruptcy judges who are consistently giving energy companies fast and easy passage through Chapter 11 and setting them back on the battlefield freed from nasty debts (and pension obligations).
Trump is not just continuing to sell a dream of more energy jobs by removing regulations, there seem to be few people calling him on it.
Trump said his stance on hydraulic fracturing and coal is at odds with Clinton’s agenda, which he said would devastate the economy with added taxes and regulations. He cited Clinton’s statement earlier this year that she would “put a lot of coal miners and coal companies out of business,” though she was marking a larger point about taking care of workers left behind by the changing economy.
The pretense that Donald Trump can put a single coal miner back on the job is just that—a pretense. It won’t happen. It can’t happen. Because people don’t dig up coal for no reason. It has to be burned to have value, and no one wants to burn it.
At this moment, there are 156 million tons of coal sitting in stockpiles at US power plants. That’s even though coal production in the country is down by 164 million tons in just the last year. Why isn’t there more demand for coal? Look two paragraphs up—gas is incredibly cheap. The fracking boom has decimated the coal industry. Decimated doesn’t even cover it.
Fracking has killed coal. And coal is never coming back. Never ever.
There are really good reasons why coal isn’t coming back even if, right now, today, gas prices doubled. Instead, coal power plants are being converted into gas power plants. That trend is going to continue. No matter what Donald Trump or any other politician does, the demand for coal is going to go down. Continuously down. We could pay people to dig it up and just push it around … but that would be the only way to put more miners back to work.
Because there’s simply nowhere to burn any more coal than we’re already producing. And oil companies are going bust at the same time because market prices for natural gas are so low, they don’t support exploration and drilling for new wells.
Donald Trump can stick that in his pipe … and do whatever he wants with it. But his energy plan is ridiculous.
