How a Trump Administration Could Reshape U.S. and Global Energy Markets

With the Trump administration set to take office, significant shifts in energy policy are expected, which will impact energy markets across oil, gas, and electricity. With an agenda focused on expanding fossil fuel production, regulatory reform, and an adjusted approach to renewable incentives, here’s how these changes are likely to influence energy prices and supply stability for energy buyers in the coming years.

One of the administration’s top priorities is to boost oil and gas production, potentially through expanded drilling leases on federal lands and offshore areas. In the short term, this influx of new supply is expected to place downward pressure on oil and natural gas prices, creating immediate savings for energy buyers.

However, low prices present risks for U.S. producers. If prices fall below breakeven levels, some producers may halt exploration and drilling, potentially leading to price spikes when demand rises again. The cyclical nature of oil and gas prices—driven by supply swings—means that long-term price stability could be compromised if production stalls. Energy buyers may benefit in the short run, but should be aware of potential future volatility if production pulls back due to low profitability.

Source: EIA November STEO

The Trump administration is expected to streamline infrastructure development, fast-tracking approvals for pipelines and transmission lines. This could help reduce regional bottlenecks, especially in the Northeast and Midwest, where limited pipeline capacity has historically raised energy costs during high-demand periods.

For energy buyers, this infrastructure boost promises benefits through reduced transportation costs and greater price stability. However, local resistance to large-scale projects could slow this progress. If successful, these developments could improve overall reliability and moderate costs in high-demand areas.

Despite a possible re-evaluation of the Inflation Reduction Act, its passage has brought notable economic benefits to red states like Texas, Oklahoma, and Wyoming. These states have seen job growth and investment from renewable projects supported by IRA incentives. While adjustments to the IRA may impact the pace of future projects, many local economies now benefit from its incentives.

As a result, some IRA provisions may continue, especially where they support local economic growth. For energy buyers, this could mean sustained renewable energy projects in regions where federal support has created long-term industry momentum. Any rollback would likely be selective to preserve these economic benefits while aligning with the administration’s energy goals.

While federal renewable incentives may be scaled back, demand for clean energy remains strong due to corporate sustainability commitments and state policies. States with Renewable Portfolio Standards (RPS) will continue to support wind, solar, and battery storage projects, creating a continued, if slower, path for renewables.

For energy buyers, a more gradual renewable rollout could mean short-term price increases as fossil fuels continue to play a leading role in power generation. However, demand from corporations and states will likely keep renewables in the mix, offering stable pricing opportunities over time as green projects progress.

Source: EIA November STEO

Key Takeaways for Energy Buyers

• Short-Term Relief, Long-Term Volatility? Price drops due to increased production may benefit buyers, but potential pullbacks could lead to future price volatility.
• Infrastructure Expansion could stabilize regional energy costs, especially if new pipelines and transmission lines reduce bottlenecks in high-demand areas.
• IRA Adjustments may impact renewables, but significant red-state benefits may lead to selective continuation of incentives supporting local economies.
• Sustained Renewable Demand from states and corporations could help keep renewable projects in motion despite potential federal rollbacks.

The Trump administration’s energy policies present both opportunities and risks for energy buyers. Short-term price savings could be tempered by the potential for longer-term price swings, making a balanced approach to energy procurement advisable.

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