Executive Order on Energy Emergency Seeks to Further Accelerate US Oil and Gas Production

The President issued an executive order Declaring a National Energy Emergency on Inauguration Day. The order intends to fast-track energy infrastructure permitting and boost fossil fuel energy supply without consideration of solar and wind energy.

It is expected that the order and subsequent agency actions, including a period of review, will spur more permissive policies for fossil fuel development, muting the environmental regulations of the Clean Water Act and other environmental laws.

US energy production already at record highs: The emergency declaration is puzzling on its surface, as the US is already the world’s largest oil producer and has seen a surge in energy production—including oil and gas—in recent years. There is no current fuel shortage, and the price of crude oil has remained flat over the last decade.

Energy prices and demand will affect new development: Energy firms will assess the economic viability of additional energy supplies as long as crude oil prices hover around $75 per barrel. More costly projects located in remote or inhospitable locations may be deemed too risky in the short term.

The TCB take: There are few grounds for legally challenging an emergency declaration by the President, although legal challenges will likely result regarding use of environmental regulations. The immediate impact of the executive order may be that energy companies cautiously expand exploration of oil and gas sources in the US and commence production, but only if market forces prove favorable.