More oil, less wind: Shifting focus in energy industry
Traditional oil drilling in the United States
The current U.S. administration stated it would open more federal lands to oil drilling and streamline the process for permitting and easing regulations. This is not an immediate guarantee that oil companies will increase drilling in the United States. There is still much work to be done managing supply, demand, and pricing.
Withdrawal of wind permits on public land
The previous U.S. administration prioritized wind energy development on public lands. However, the current administration has proposed withdrawing wind permits, potentially opening the way for increased fossil fuel energy sources.
Expanding domestic oil drilling could lower fuel costs, potentially reducing fuel surcharges for carriers and shippers. Continued reliance on fossil fuels, coupled with other executive orders reducing electric vehicle targets and funding, may lessen the urgency for carriers to transition away from diesel-powered trucks. Both factors could ease pressure on driver supply and allow for some carriers to stay in the industry longer.
Trade and tariff impact
The U.S. administration recently announced 25% tariffs on all imports from Canada, except for commodities for energy or energy resources, which would have a 10% tariff applied. This could be impactful as 24% of the oil processed in U.S. refineries is from Canada. At the time this report published, these tariffs are set to go into effect March 4.
From a solar perspective, a key trade topic to monitor is whether the Inflation Reduction Act, provisions that govern investment tax credits, production tax credits, and the 45X tax credits will be repealed. The industry relies on these heavily. It’s also worth monitoring whether the current U.S. administration will utilize Section 301 to increase tariffs for these commodities.
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