New Delhi: As Donald Trump took charge as the US president for the second time, reiterating his campaign slogan—“We will drill, baby, drill”— environmentalists have expressed concern over the potential impact on the global commitment to switch to cleaner fuels.
Industry experts have, however, pointed out that the move may have some short-term gains as it is likely to slash oil prices, allowing import-dependent countries like India to buy more.
On the sidelines of an event Tuesday, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said that there is now a possibility of India increasing its oil and gas purchase from the US.
But environmentalists called these gains short-term, which will have a counterproductive impact on the future. Many said that in the long run, the push for global traditional fuels may likely slow down the switch to cleaner fuels.
What this means
In an executive order released by White House on 20 January, the US administration said that allowing more oil-drilling and expanding federal lands open to drilling rigs—including opening up the Arctic National Wildlife Refuge in Alaska—was being done to “unleash America’s affordable and reliable energy, and natural resources”.
While the final implementation of this would be legally challenging, requiring Congress to act in force, it would allow the US government to fast-track permits for new fossil fuel infrastructure.
Trump’s commitment towards an “energy emergency” came after outgoing President Joe Biden, in the final weeks of his presidency, announced a ban on future offshore oil-and-gas drilling along a large part of the US coastal waters, saying that its environmental and economic risks outweigh benefits.
According to experts, even though this move by the Trump administration will significantly increase oil production in the US, and by extension, boost the global oil supply, it is also expected to lead to a fall in global oil prices.
The US is the largest global producer of crude oil at the moment, but according to oil companies there, the industry is already drilling as much as it can. According to International Energy Statistics, crude oil production in the US, including condensate, averaged around 12.9 million barrels per day in 2023. This exceeded its previous record of 12.3 million barrels per day in 2019.
The average monthly US crude oil production hit a monthly record high in December 2023 at more than 13.3 million barrels per day.
Manish Bapna, president and CEO of the Natural Resources Defense Council (NRDC), said that the US government’s decision would embolden a fossil fuel industry that is determined to block climate action, locking in decades of more dependence on dirty fuels driving the climate crisis.
He said it would hamstring American workers and companies in a global clean energy market, which was worth two trillion USD last year alone. “It condemns vulnerable nations to pay a price they can’t afford for a crisis they didn’t create.”
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Impact on India
Industry experts said that the announcement to increase oil production might not be all bad news for India, purely from the point of view of oil imports.
India is the third-largest consumer of crude oil in the world, and around 85 percent of its demands are met by import. This means that a fall in global oil prices will be beneficial for India.
Data from S&P Global Commodities, an international commodities information provider, showed that between January and September 2024, nearly 40 percent of India’s crude oil demands were met by Russia, followed by Iraq, Saudi Arabia, UAE and then the US.
In the first quarter of 2021, India’s US crude oil share rose to as high as 15 percent. Most US crude exports to India consist of light grade, primarily the West Texas Intermediate (WTI), with around 50 percent previously discharged for Reliance Industries.
But India has maintained it will import from anyone who provides them oil at lower rates. Experts, however, said that while benefiting from the US’ trade policy, India must stay focused on its own climate and clean energy commitments.
“The impact of the new US administration is likely to be felt not so much in the area of private investments in renewable and clean energy space, as on global resource flows for financing clean energy transition. The forces of competitive trade actions in the name of climate may get reinforced,” said R.R. Rashmi, distinguished fellow at The Energy and Resources Institute (TERI).
(Edited by Tikli Basu)
Humans need fossil fuels for their progress and prosperity. It’s very basic and simple.
Any attempt to shift to non-fossil fuels would be very problematic.