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Trump Declares Energy Emergency as Asian Companies Suffer from Policy Shifts

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Trump

After his inauguration on the 20th, U.S. President Trump signed a series of executive orders. In the energy sector, his measures to promote the development of fossil fuels and revoke bans supporting renewable energy have attracted widespread attention. The New York Times reported that, just before Trump’s dramatic pivot towards fossil fuels, the U.S. experienced its hottest year on record. Analysts believe that many of Trump’s energy policies cannot be implemented with a mere stroke of a pen. Some policies require action from federal agencies or Congress, while others may face legal challenges. Will Trump’s new energy policies become a reality, and how significant will their impact be?

“Drill, and drill aggressively”

Reuters reported that, to maximize the production of traditional energy sources like oil and natural gas in the U.S., Trump announced a series of executive orders on Monday. These included declaring a national energy emergency, revoking environmental protections, and withdrawing from the Paris Agreement. The report noted that these energy measures on Trump’s first day in office marked a sharp pivot in Washington’s energy policy. Additionally, related reports indicate that Trump also signed orders aimed at promoting oil and gas development in Alaska, overturning Biden’s efforts to protect Arctic lands and U.S. coastal waters from drilling.

“The inflation crisis is caused by massive overspending and rising energy prices that’s why I am announcing a national energy emergency today. We will drill, and drill aggressively.”According to The Straits Times in Singapore, Trump declared in his inaugural address, “We will lower energy prices, replenish the Strategic Petroleum Reserve to its highest levels, and export American energy to the world. We will become a wealthy nation once again, and the flowing gold beneath our feet will help us achieve that goal.”

NPR reported that Trump is the first U.S. president in history to declare a national energy emergency. Bloomberg commented that while many of Trump’s executive orders will face prolonged regulatory procedures, their effects will ripple through every corner of the U.S. energy sector, from oil fields to car dealerships.

Us media: Reducing oil prices will not be easy

Trump’s executive orders exerted downward pressure on international oil prices. On January 20, Brent crude futures fell 0.79% to $80.15 per barrel. U.S. crude futures also traded lower but lacked a closing price due to a market holiday. During Asian trading hours on January 21, international oil prices opened lower but stabilized after a rebound.

Reuters reported that the market has absorbed the lack of new tariff measures and the implications of Trump’s orders to boost U.S. oil and gas production, leading to stable oil prices without significant fluctuations. Another Reuters report noted that U.S. crude output reached a record high following the Russia-Ukraine conflict, but whether Trump’s measures will further boost production remains uncertain.

NPR cited analysts highlighting a short-term global oversupply of oil and gas. During his campaign, Trump repeatedly promised to cut energy prices by 50%, but analysts believe this goal is unrealistic. Excessively low oil prices would discourage production, triggering a typical boom-and-bust cycle in the oil industry. Additionally, low prices would harm traditional oil producers, who are staunch supporters of Trump.

The New York Times reported that Trump’s efforts to reshape the U.S. energy landscape could clash with market realities. According to the latest data from the U.S. Energy Information Administration, U.S. oil production reached a record high last year, while inflation-adjusted natural gas prices fell to their lowest annual average on record. Many oil and gas companies have advocated for deregulation but are hesitant to significantly increase production due to potential profit pressures.

NBC News noted that even if U.S. oil production rises, it may not lead to a global drop in oil prices. Oil is traded globally, and other producing countries adjust their output based on supply and demand dynamics to prevent prices from falling too low.

Trump’s push for traditional energy development has faced opposition. Reuters reported that environmental organizations plan to challenge these executive orders in court. Alex Floyd, spokesperson for the Democratic National Committee, criticized the policies, saying that enabling polluting industries that harm public health can hardly be described as “America First.”

Setbacks for U.S. Auto Electrification?

The White House announced in its executive orders the termination of the “Green New Deal” and the cessation of external funding through initiatives such as the 2022 Inflation Reduction Act. Reuters previously reported that Trump plans to eliminate the $7,500 federal tax credit for electric vehicle (EV) purchases.

News of the repeal of the “Green New Deal” immediately impacted related industries in Japan and South Korea. Reuters reported that shares of Japanese automakers and South Korean battery manufacturers fell on Tuesday. LG Energy Solution shares dropped about 5% during the day, while Samsung SDI and SK Innovation saw declines of over 4%. Asian stock markets reacted within hours of Trump’s inauguration, underscoring how his policy shifts could pressure major manufacturers in Japan and South Korea, Washington’s closest regional allies.

Some experts suggest that without the incentive of subsidies, U.S. consumers’ enthusiasm for purchasing electric vehicles (EVs) will significantly decline. In the short term, American automakers like GM and Ford are expected to slow their electrification efforts, while the confidence of Japanese and South Korean EV supply chain companies in entering the U.S. market may weaken. Experts believe that Trump’s policy approach appears to focus on promoting traditional gasoline vehicles to revitalize the U.S. manufacturing sector and create more jobs. However, such regressive industrial policies could dampen the motivation of U.S. automakers to develop in the field of new energy, further widening the gap between them and the world’s leading players in this domain.

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