Although it, on the surface, seems empowering, the Trump administration’s desire for “energy dominance” means little in reality.
Sloganeering is synonymous with politics, and the best slogans — that is, the most useful politically — are devoid of meaning. This allows its originators to agree that a given slogan is consistent with some high-minded principle while denying that it means any specific thing, while allowing those hearing it to interpret it in any way they choose.
The use of slogans is not limited to any particular political party, interest group, or ideological movement. For the political left, in the context of energy and environmental policy issues, the modern classic slogan is “sustainability” — a buzzword utterly empty analytically but useful politically as it allows the leftists to describe their policy nostrums as “sustainable” (cheers) while denigrating those that they oppose as “unsustainable” (boos).
For the Trump administration, the slogan of the day is “energy dominance.” In an executive order issued last February, President Trump ordered the establishment of a National Energy Dominance Council, one central purpose of which is to “advise the President on how best to exercise his authority to produce more energy to make America energy dominant.” In an earlier executive order, Trump declared a “National Energy Emergency” blamed explicitly on the “policies of the previous administration.” This “emergency” manifests itself as an “inadequate … energy and critical minerals … identification, leasing, development, production, transportation, refining, and generation capacity of the United States. … We need a reliable, diversified, and affordable supply of energy to drive our Nation’s manufacturing, transportation, agriculture, and defense industries, and to sustain the basics of modern life and military preparedness.”
It remains unclear as to precisely how “energy dominance” is defined, other than a general goal of more energy production. How much more? Of what kinds? How will we know when “energy dominance” is achieved? Note that the “previous administration” also preferred “more energy,” although in the form of hugely inefficient and unreliable wind and solar power, as well as other energy forms that cannot satisfy a market test — all forced upon the market through massive subsidies and regulatory interventions.
Accordingly, it is one thing to argue, as Trump does, that reform, streamlining, and a substantial reduction in regulatory obstacles to investment in energy investment and production is needed. In that sense, “energy dominance” can be interpreted as a reduction in the role of central planning. Fair enough: Let market forces work, with less interference from bureaucrats and regulators and the vast array of Beltway blowhards who just know in their hearts how a little tweaking can improve resource allocation.
But market forces — driven by endlessly shifting demand and cost conditions and constrained by substantial uncertainties — can be fickle. If market forces yield a substantial reduction in energy investment, even given a large easing of regulatory costs, energy production in, say, the intermediate term might be reduced. Would that be consistent with “energy dominance?” After all, Trump argued, while declaring a “National Energy Emergency” that the United States “has the potential to use its unrealized energy resources … to sell to international allies and partners a reliable, diversified, and affordable supply of energy.” What happens to “energy dominance” if those foreign demands for US energy decline? If one effect of increased energy exports is a stronger dollar, what would happen to “energy dominance” when imported inputs for domestic energy production become more expensive?
Trump’s “energy dominance” instinct is correct in that getting government out of the way will yield more energy production, other factors held constant. But that caveat is very unlikely to obtain, as the number of other compounding factors is staggering, yielding shifts in energy prices that may or may not be consistent with more production.
Consider Trump’s assertion that “high energy prices” represent a “threat to the American people.” Suppose high energy prices are the result of strong economic growth and demand conditions; in what sense are such prices a “threat?” More generally, if Trump wants more energy production, high prices may be a requirement even given a reduction in regulatory constraints. This is very likely to be the case, for example, for the offshore production of oil and natural gas.
Because “energy dominance” is a slogan, it is ill-defined and leads to confusion even (or especially) among the policymakers who believe in it most strongly. It would be far better for the administration to specify its goals clearly: far fewer regulatory burdens on the discovery, investment, production, and transport of efficient energy; fewer subsidies and other subventions for inefficient and unreliable sources of energy; and a far greater reliance on market forces. With respect to the last point, slogans may have their uses, but they are not necessarily consistent with an increased reliance on market forces that may not cooperate.
About the Author: Benjamin Zycher
Dr. Benjamin Zycher is a senior fellow at the American Enterprise Institute, where he works on energy and environmental policy. He is a former senior economist at the RAND Corporation, a former adjunct professor of economics at the University of California, Los Angeles (UCLA) and at the California State University Channel Islands, and is a former senior economist at the Jet Propulsion Laboratory, California Institute of Technology. He served during the Reagan administration as a senior staff economist for the President’s Council of Economic Advisers, with responsibility for energy and environmental policy issues. Dr. Zycher has a doctorate in economics from UCLA, a Master in Public Policy from the University of California, Berkeley, and a Bachelor of Arts in political science from UCLA.
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