President Trump recently announced that the U.S. would withdraw from the Paris climate agreement, citing the “draconian financial and economic burdens the agreement imposes” on the nation. Although economists say that the accord would likely create about as many jobs in sustainable energy as it would take away in oil and gas industries, analysts and investors are now predicting that the current administration will continue to increase its drilling and production in those polluting outfits even more.
Just hours after the withdrawal announcement was made, the cost of oil experienced a sharp drop. The price of a barrel of crude oil fell 2.4% to $47.18 in electronic trading. But the U.S. has increased its oil production in recent months, and the formerly pricey process of extracting shale oil is now much more economically feasible. In fact, estimates show that large companies could boost their spending on drilling by 58% in 2017.
Even before the announcement, Trump made it clear that the administration means business when it comes to American drilling. Last month, the White House’s budget proposal outlined the idea of selling leases for oil and gas drilling in the Arctic National Wildlife Refuge. The 19-million-acre refuge has been closed to oil exploration since 1980 after major concerns were raised about the impact of drilling on the polar bears, caribou, and other animals in the region.
The White House’s plan would raise nearly $2 billion, but between the high costs involved and the fierce opposition the proposal would face, many feel it’s unlikely that the plan would come to pass. To open the refuge, Congress would need to approve it.
More puzzling is why the administration is pushing to drill on protected land when the rest of the U.S. has a surplus of untapped oil. At present, there are more than 900,000 active oil and gas wells throughout the country. But the recent increase in American oil production has been used as the reasoning for selling off the oil reserves in the refuge — despite the fact it’s meant to act as a safeguard in emergency situations.
However, even if the refuge isn’t opened, it’s likely that the nation will continue to increase its own oil production. The Paris Climate Agreement would have made it necessary for the U.S. to reduce its harmful emissions by more than 25% below its levels from 2005 by the year 2025. This would have severely limited the oil and gas industries. However, the agreement was non-binding and allows each country to determine its level of emission reductions. Trump has maintained the idea that the U.S. could renegotiate the agreement, but the country could have simply changed its climate under the agreement in lieu of leaving it entirely.
Analysts at German bank Commerzbank said in a statement to ABC News, “Now that U.S. President Trump has announced that the U.S. will be withdrawing from the Paris Climate Agreement, it is expected that the U.S. will expand its oil production even more sharply.”
According to the CEO of Rosneft, Russia’s state-controlled oil giant, the increase in shale oil production from the U.S. would probably deliver an extra 1.5 million barrels of crude oil to the marketplace in 2018.