So long, OPEC, you’re at the top of President-elect Trump’s hit list

Donald Trump
President-elect Donald Trump.

Donald Trump promised to lift restrictions on domestic energy industry and ban OPEC oil from American markets

Change is coming, folks. Assuming, of course, that President-elect Donald Trump follows through with the vague energy policies he announced on the campaign trail.

Donald Trump
Continental Resources CEO Harold Hamm has been an influential advisor to Trump on energy policies.

But if there is one policy Americans – and allies like Canada and Mexico – should pay close attention to, it’s Trump’s promise to ban OPEC oil from US markets.

The Republican candidate laid out his energy policy in a May 26 speech in Bismarck, North Dakota entitled “An America First Energy Plan.”

“America’s incredible energy potential remains untapped. It is a totally self-inflicted wound. Under my presidency, we will accomplish complete American energy independence,” he said.

“Imagine a world in which our foes, and the oil cartels, can no longer use energy as a weapon.”

Now that he will soon be president of the United States, Trump no longer has to just imagine such a world. He has the means to accomplish it.

In 1959, at the height of the Cold War, President Dwight Eisenhower used his executive authority to enact the Mandatory Oil Import Quota Program, restricting imports to 12.2 per cent of domestic production. The quotas remained in place until 1974, when they were ended by President Richard Nixon.

donald trump
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The rationale behind Eisenhower’s program was national security, the desire for energy independence.

The same is true of Trump: “We will become, and stay, totally independent of any need to import energy from the OPEC cartel or any nations hostile to our interests,” he said during the Bismarck speech.

Trump’s strategy has some domestic supporters.

The Panhandle Producers & Royalty Owners Association – comprised of oil companies and royalty owners from the Texas Panhandle to New Mexico’s stretch of the Permian Basin, north to western Oklahoma and southwestern Kansas – has been aggressively promoting a ban of OPEC for months.

I suggested in an April column that barring OPEC oil from the United States was an idea looking for a political champion, and wondered which presidential candidate would pick up the concept and run with it.

Turns out it was Trump.

donald trump
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The United States currently consumes 20 million b/d of crude oil and produces about 8.5 million b/d. OPEC imports account for 3 to 3.5 million b/d (Canada supplies 45% of total imports).

Restricting imports would probably raise domestic oil prices – and gasoline prices for consumers – but it could ultimately protect consumers if the dearth of drilling over the past two years causes an oil supply shock and high prices, as some analysts have suggested, according to energy economist Ed Hirs.

An important part of the Panhandle Producers & Royalty Owners Association plan would be to exempt Canada and Mexico from import quotas to make up for the lost OPEC supply. That might take a few years as Canada cranks up oil sands production and Mexican oil industry reform takes hold, but Hirs thinks the Middle East oil could be replaced in relatively short order.

And, of course, American shale producers are chomping at the bit to get back to work. Pioneer Natural Resources CEO Scott Sheffield opined a few months ago that Texas’ Permian Basin alone could probably increase oil production from 2 million to 5 million b/d.

In the Bismarck speech, Trump estimated that “lifting restrictions” on the American energy industry would result in a $700 billion increase in annual economic output over the next 30 years, more than a $30 billion increase in annual wages over the next seven years. and more than $20 trillion in additional economic activity and $6 trillion in new tax revenue over the next four decades.

Eliminating burdensome regulations on oil and gas production will do little for the American industry if they are part of an over-supplied international market, where Saudi Arabia and Russia call the shots.

Expect Trump’s ban on OPEC to be near the top of his priorities, perhaps even part of his first 100-days agenda.

Ph: 432-978-5096 Website:
Ph: 432-978-5096 Website:

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1 Comment

  1. If Trump bans OPEC oil from America OPEC would just flood the world market driving prices down.

    Then America has to create a price floor to maintain domestic production and if Keystone is built export restrictions to keep oil sand oil from flowing to Louisiana and then offshore. This raises inflation in the US and keeps “jobs from coming back” and potentially the difference is enough to pay the tariff on Mexican and Chinese imports and jobs move abroad.

    The policy you have just described was called the National Energy Program under Trudeau Sr. in Canada in the 1980s, it failed miserably and it shows you don’t know your energy history.

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