“Drill, baby, drill” was one of Trump’s more important election campaign slogans. It holds the implicit promise to favor oil and gas as an energy source over renewables like solar and wind. Trump can, and has been doing so, ignore the problem of petroleum-induced global warming–and order the shutdown of renewables projects. In addition, it could well be that at the behest of mega-donor Elon Musk, he may also restrict (bar?) imports of cheap EVs made by Chinese companies in Mexico.

Two issues:

–lots of domestic oil and gas extraction, including in the state of Pennsylvania, where I’m writing this, is done mainly through hydraulic fracking, i.e., using high-pressure streams of water and sand to make big cracks in solid oil/gas-bearing rock. That creates paths for trapped hydrocarbons to reach a well, and from there get to the surface.

Fracking more about engineering prowess in squeezing more output either from mature areas, or ones uneconomical, pre-fracking, than finding completely new deposits, which tend to be in remote areas or deep under the sea. Costs are relatively high with fracking, something like $50+ per barrel vs maybe $20 (a number I just made up–it could be lower) for a big offshore find. On the other hand, there’s much lower risk of coming up completely empty.

So frackers make a ton of money when the oil price is, say, $80 a barrel, and lose their shirts at $40.

–Saudi Arabia controls the world oil price, as I see it. That’s because it has decades worth of potential production that can be brought to the surface very cheaply–$10 a barrel or less. Since the 1980s, the kingdom has looked to set its benchmark price based on creating the highest present value, assuming production for, say, 30 years. It has been less concerned with near-term market share, since its total reserves are so vast. More important to it to have oil buyers still there a quarter-century+ from now.

This may be changing, though. The rise of alternative power sources and the rapid proliferation of electric vehicles as replacement for gasoline-powered cars both argue that 30 years is too long a time frame to bet on. The profit-maximizing path is more likely to be to produce more, sooner, accepting lower prices, to get more output out the door before petroleum goes the way of coal and whale oil. The most obvious way to increase unit sales is to price below the breakeven for frackers.

If what I’ve described above is anything near the case, the Trump strategy isn’t the best.