Brian Zinchuk is editor and owner of Pipeline Online
Donald Trump, left, speaking to Dave Ramsey. YouTube/The Ramsey Show
“I believe I’ll be able to get energy down to 50 per cent – 50 – five-oh – of what it is right now within a period of less than a year.” – Donald Trump
NEW YORK – Former president Donald Trump has frequently spoken of “drill, baby, drill.” And most people in the energy business applaud that. But what does he really want to accomplish by that? He explained in greater depth to financial podcaster Dave Ramsey at Trump Tower in New York in recent days. Trump means to lower energy costs by half within a year to combat inflation.
If this hasn’t been setting off alarm bells in Canada’s oil industry, it should. While Trump doesn’t specifically use the word “oil” in his comments, he is clearly referencing it. He speaks of “liquid gold” and opening up the Arctic National Wildlife Refuge (ANWR) for drilling – a major oil play in northeast Alaska.
And remember that during the roughly seven-year oil downturn that started in late 2014, those years included the entirety of the Trump 2017-2021 administration. According to TradingEcomonics.com, the price of WTI floated between US$54 and US$70 for most of his term, generally below US$60, until COVID-19 cratered prices in early 2020. The entirety of the Trump administration saw oil prices below what they are today.
Trump specifically talks about reducing the cost of energy by half in less than a year. He said this on a day WTI was trading for around US$70 per barrel. Cutting it by half would drop oil prices to around US$35 per barrel, which is less that the range of what happened during his first administration, excluding the months around the onset of COVID.
That price may have been good for the broader economy, but it was devastating particularly for the Canadian oil industry. In Saskatchewan during the downturn, staffing levels at many oilfield service companies dropped by half, and total remuneration also dropped by half. Saskatchewan production, while generally flat, still has not recovered to late 2014 levels. Drilling, in particular, was forced to become dramatically more efficient, resulting in a reduction of operating drilling rigs by over half compared to 2013 levels.
Trump does not explain how dramatically ramping up production to see pricing fall by half would be enticing to oil companies. Those companies would see their revenues plummet as a result, while their production costs would rise due to the cost of additional drilling. Essentially, they’d have to produce a lot more barrels to make the same dollars they’re making now, metaphorically cutting their own throats. Nor does he discuss how OPEC might respond to America flooding the market with more barrels.
The interview was posted to YouTube on Oct. 2. You can watch it here.
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Here’s the transcript from the energy portion of the interview:
Dave Ramsey: As you know, we do a show called the Ramsey show and talk to regular folks every day, calling in most of the time, with financial trouble, sometimes with financial victories, stuff we’ve taught them to do, the basic grandma’s common sense stuff.
Donald Trump: Right.
Ramsey: And that audience that’s going to be watching this is they’re not concerned with hot things, but they are concerned with $8 eggs, $5 dollar gas, 7% interest rates, and a house they can’t afford, with wages not going up as fast as house prices. This inflation thing’s a big deal. So in the first 90 days, the strokes that you make to change the economy when you’re elected are a big deal. What’s the first things you’re going to do on that?
Trump: Well, in terms of inflation, you’re right, and it’s almost inflation over the economy, if you want to really know, because people are getting wiped out like never before.
I think it’s highest inflation we’ve ever had. They say it’s the highest in 48 years. I think it’s the highest ever. There’s never been any mess like this, and it’s because of what they did with energy. Also, then they topped it with spending with money that trillions and trillions of dollars that they didn’t need, that’s being just wasted.
But the first thing you have to do is get the energy down. If you get the energy down, other things are going to follow. You want to get the interest rates down, too. And interestingly, even interest rates are going to follow energy, because it’s going to take that burden off the shoulders of the economy and off the shoulders of inflation, itself. And we are going to drill at a level that you haven’t seen since, let’s say, four or five years ago. But even more so, we would have been so dominant by this point. If you remember, when you go back to the beginning of this really failed administration that we’re in right now, what they did was they turned off the energy. They turned off everything that I had done.
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Ramsey: You’re going to turn back on the Keystone. You’re going to turn back on the drill, baby, drill line in the acceptance speech.
Trump: It says it all. You know, I’d like to use another line, but there’s no line that’s better. And we’re going to drill baby drill.
But the fact that they turned it off, and then the energy; if you look back at the very initial period of their administration, the numbers started going through the roof. The energy numbers, inflation was good, and then they went back to Trump, where they’re trying to equal it, and it kept it bad, as opposed to horrific. And it’s been really bad, and the energy has been very expensive, but nothing like it could have been. So they went back to Trump-type things, but we would have been now three to four times more. We would have been dominating the entire world on energy. We have more than anybody else, as you’ve heard me say, but as you also know,
Ramsey: Right.
Trump: We have, I call it ‘liquid gold.’ We have more liquid gold under our feet than anybody else, actually, by far. We would have dominated. We would have been taking care of Europe. We would have been taking care of Asia. We would have been taking care, you know, ANWR in Alaska is the biggest find anywhere in the world. It could be as big as Saudi Arabia. And I got it. Ronald Reagan, couldn’t get it. Nobody could get it. I got it. It was done, ready to start. And when these people came in, they turned it off, they terminated it. Nobody could believe it.
A drilling rig laydown yard west of Williston, North Dakota on Dec. 5, 2023. Photo by Brian Zinchuk
Ramsey: I don’t know if people realize that, you know, 10 to 15 per cent of the entire economy is energy, and it weaves its tentacles through everything else. So $5 gas affects the bread trucks, and that affects the cost of the bread then, and so getting that plentiful, that changes everything.
Trump: So I have a little thing that I’ve been saying lately, because I think it’s easily achievable. You know, we pay very high energy costs, and especially now, but we’re paying very, very high, I believe I’ll be able to get energy down to 50 per cent – 50 – five-oh – of what it is right now within a period of less than a year.
Ramsey: Wow,
Trump: that’s pretty good. It’s going to happen fast. Okay, it’s going to happen fast.
Ramsey: What are you going to do to do that? What causes that?
Trump: They’re going to drill. They’re going to they’re going to frack. They’re going to do things that they have tremendous …
Ramsey: You’re taking the regs off. You’re taking the regulations off.
Trump: We have to. They put them back on. They put regulations back on that areas that have no environmental real meaning. They don’t let them drill. They’re taking leases away, government leases that you’re hearing about. I think we can get energy costs down to half of what, if we do that …
Ramsey: That’s pretty dramatic.
Trump: It Is. Everything, all of those inflated prices, are going to come down with it.
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