Fossil Fuels in a Trump Administration: drill, but at what cost?
Steven Atwood (Junior Researcher G.E.O Environment)
Abstract: The Trump Administration entered office with one of its slogans being “drill, baby, drill,” combining it with tariffs to “Make America Great Again.” The article seeks to analyze fossil fuels prior to President Trump’s inauguration, what the Trump Administration has done so far alongside Congress on both the fossil fuel industry and climate action, to simultaneously view and predict the effects in the U.S. and around the world. After approximately 4 months in power, some Executive Orders by the Trump Administration have taken immediate effect, but so have actions by other actors such as Saudi Arabia, and the rest of OPEC+.
Fossil Fuels at the end of the Biden Administration
The United States under the Biden Administration was reportedly headed toward the Paris Agreement’s target of net-zero greenhouse gas emissions by 2050 entering Election Day, November 5, 2024. The Biden Administration had taken the most significant climate action yet by the United States, most notably with 3 legislative acts: the Inflation Reduction Act (IRA), the Infrastructure Investment and Jobs Act commonly known as the Bipartisan Infrastructure Law (BIL), and the CHIPS and Science Act. These laws combined a public investment total of 507 billion USD on decarbonization: 369 billion USD in energy incentives and climate related programs, 67 billion USD in research and development for zero-carbon technologies, and 71 billion USD in additional clean energy and climate infrastructure projects and programs (UNCTAD 2022) (Yacobucci 2025). Additionally, President Biden sought to have 30% of the United States’ land and waters protected by 2030, withdrawing 674 million acres (272 million hectares) – an area roughly the size of Argentina – from oil and gas leasing through new protections (Zeno, Rowland-Shea 2025). The Biden Administration became limited to rulemaking by executive agencies and implementing the programs, projects, and funding opportunities outlined in these Acts after the Republican Party won the majority in the House of Representatives in the 2022 midterm election. These executive actions and legislation by the Biden Administration supposedly pushed the fossil fuel industry towards the Republican presidential candidate Donald Trump.
However, the fossil fuel industry was reaching record levels of production and profits under President Biden while it was drafting executive orders for then-candidate Trump aiming to reverse the pause on new natural gas export permits that began in January 2024 and increase access to federal lands and waters for fossil fuel extraction. (Lefebvre 2024) Russia’s second invasion of Ukraine in February 2022 sent the global oil and gas market into significant volatility, so while the EU began shifting away, at least officially, from Russian oil and natural gas, the United States sought to fill the gap left behind. The U.S. did so in three ways: expanding production extracting an average of 12.9 million barrels of oil per day (bpd), with a record 13.3 million bpd in December 2023, increasing exports of liquified natural gas (LNG) in 2024 to 11.9 billion cubic feet (337 million cubic meters) per day, and lastly, profiting record amounts as U.S. companies such as ExxonMobil and Chevron in both 2022 and 2023, making 91.7 billion USD and 56.6 billion USD respectively (Kreil 2024) (Zaretskaya 2025) (Soni 2024).
This growth in production and stabilization of supply helped lead Brent crude oil spot prices to an average of 82 and 81 USD in 2023 and 2024 respectively, reaching a low 78 USD at the end of 2024. This is still a healthy profit for U.S. companies as the breakeven price for oil drilling in the Permian Basin, the most oil-rich area in the country, is 33 USD for existing wells and 61 USD for new ones (Statista 2025). U.S. oil executives became less enthusiastic following the election of Donald Trump, most notably represented by ExxonMobil President Liam Mallon who said “We’re not going to see anybody in ‘drill, baby, drill’ mode,” as U.S. producers were at near maximum production and a further increase in supply could bring the price of oil below the break-even number (Kennedy 2024).
The Trump Administration’s climate backsliding
The Trump Administration wasted no time in implementing the “drill, baby, drill” agenda, while seeking to undo much of the climate action taken by the Biden Administration. One his first day in office, President Trump signed executive orders: declaring a national energy emergency to facilitate energy production; blocking enforcement of state and local laws for energy projects from sources other than solar and wind; prioritizing fossil fuel development; terminating new wind energy projects; withdrawing the United States from the Paris Agreement; directing the Environmental Protection Agency (EPA) to revisit its 2009 finding that climate change is dangerous; rescinding Biden Administration executive orders on climate, environmental protections, and climate justice; eliminating all federal positions related to climate justice; and unconstitutionally impounding funds appropriated by the IRA and the BIL and review any already disbursed funds. (Sabin Center for Climate Law 2025) These first 24 hours were to be expected in part as it is not uncommon for Day 1 executive orders to rescind some from the previous administration. However, the breadth of climate action immediately repealed demonstrated what this Administration’s plan was: ignore or eliminate all forms of climate action, “stop the war on oil and natural gas,” and pursue “energy dominance.” (McNamee 2023, 365) (The White House 2025a)
These two phrases can be immediately derived from the “Mandate for Leadership: The Conservative Promise” also known as Project 2025, a handbook by the Heritage Foundation for an incoming conservative president. At the time of writing, eight of the contributors for this book have senior leadership positions within the Trump Administration. This guide, in its introduction, finds fossil fuels to be a central pillar of the U.S. economy stating, “America’s vast reserves of oil and natural gas are not an environmental problem; they are the lifeblood of economic growth.” It also promotes the concept of “energy dominance” as the path toward decoupling from China and revitalizing U.S.’ industry and manufacturing, while blaming the energy crisis on “combating climate change and ESG” (McNamee 2023, 363-364). President Trump has repeated these views throughout his campaign and presidency, lamenting the “Green New Deal,” broadly meant as climate legislation and executive action taken or wanted by the Biden Administration, calling it the “Green New Scam.” (The White House 2025b)
From January 20th to the time of writing, the Trump Administration has sought to amputate anything related to climate and the energy transition from the federal government. Immediately, this meant removing all mentions of and planning on climate change from federal agency websites including the Departments of Agriculture, Defense, Energy, Transportation, State, and the EPA. The EPA will also ignore the Obama-era “social cost of carbon” rule in its permitting or regulatory decisions (EPA Press Office 2025). It also attempted to freeze 14 billion USD awarded last August to three climate groups under the 20 billion USD Greenhouse Gas Reduction Fund, a “green bank” created by the IRA (Santarris 2025). President Trump dismissed the authors of the Sixth National Climate Assessment: the Congressionally-mandated government report on the risks, impacts, and response to climate change. This dismissiveness toward carbon emissions and the energy transition marks an unprecedented tone toward the fossil fuel industry and an equally historic backslide in the public’s information on climate change.
This dismissiveness translates also in terms of federal personnel working on the environment, climate, and renewable energy. The “Department of Government Efficiency” relevantly fired 9,700 from USAID, 2,000 from the Department of Energy, 3,400 from the Forest Service, 1,909 from the National Oceanic and Atmospheric Administration (NOAA), 114 from the National Renewable Energy Laboratory, 699 from the EPA, and over 2,820 from the Department of the Interior which includes the Bureaus of Land Management and Ocean Energy Management (Lee 2025). Combined with the previously mentioned executive orders and the new budget Congress will likely pass ending incentives for renewable energy companies using Chinese components, these cuts end both the U.S.’ ability to execute and its international credibility on the energy transition by 2050, ceding the entire landscape of climate change efforts to China and the EU as these have demonstrated strong efforts weaning off fossil fuels.
President Trump has sought to minimize U.S. global influence also partly through a chaotic and unpredictable tariff strategy, using tariffs as the primary tool to bring manufacturing back to the United States. This approach has included a series of abrupt impositions and reversals: in February, he applied 25% tariffs on Canada and Mexico and 10% on China, only to withdraw the North American tariffs two days later. Shortly afterward, he imposed a 25% global tariff on steel and aluminum, fuel-intensive industries, and in late May raised them to 50% beginning in June. On April 2, he announced a global 10% tariff on U.S. imports, with higher duties based on bilateral trade imbalances, only to delay the increase by 90 days following negative market reactions.
This chaos triggered significant market volatility. For example, West Texas Intermediate (WTI), the U.S. oil market and part of the Brent oil benchmark index, crude prices fell from $72 to $59 in just one week after the April 2 announcement, as fears of a global recession depressed oil consumption. Despite separate tariff reduction deals with China and the U.K. in May, uncertainty persisted. After those deals, the U.S. Court of International Trade ruled that the President cannot unilaterally impose tariffs under the 1977 International Emergency Economic Powers Act, effectively annulling the new measures, but the decision is stayed upon appeal. In this unstable policy environment, dampening economic forecasts, oil prices remain under pressure even amid growing demand. Energy analysts at Wood Mackenzie warn that if prices stagnate or decline further, U.S. oil production, already near its profitable peak, could begin to fall by 2026 (Eberhart 2025).
The Trump Administration through its trade and climate policy is putting the U.S. in a precarious situation geopolitically as the closest allies of the last 75 years such as neighboring Canada and Mexico, but also the EU is being seen as an adversary by the U.S. While a more autonomous EU is not a negative on a strategic level, the conditions around it are so for the U.S. The EU and the U.K. are the largest buyers of U.S. oil and LNG, importing almost 2 million barrels of crude oil a day and being the destination of little more than half of the U.S.’ LNG exports. (Miranda 2025) (Tradeimex 2025). This exposes the U.S. significantly because Europe and China appear headed to wean off fossil fuels eventually, while the U.S. could likely fall behind technologically, but also have no one to sell its fossil fuel products to on a similar scale. Combine this with tariffs, ending soft power programs, and a ballooning budget deficit and one can see how the U.S. will be in a recession by the end of the Trump Administration and possibly China and the EU economically and diplomatically. OPEC+ faces a more limited situation to the U.S. as oil is a major source of income for members, many of which have higher breakeven prices than the U.S.
How OPEC+ is affecting prices
After the U.S.' shale revolution began in 2015, OPEC, led by Saudi Arabia, expanded informally into OPEC+ to include Russia, Mexico, and other nine oil-producing countries to collaborate and maintain desired oil prices. Due to lower demand the previous year, Saudi Arabia wanted to lower production to drive up prices, but Russia disagreed. In March 2020, Saudi Arabia declared a price war with Russia, increasing production by 25%, which combined with the demand decrease from the COVID-19 lockdowns, sent oil prices briefly into the negatives over the following months. Prices went up again in 2022 following the Russian invasion of Ukraine, and Saudi Arabia, as the leader of OPEC, mandated OPEC cut production to keep them up, implementing cuts three times. However, in June 2024, Saudi Arabia changed its plan.
Saudi Arabia announced it would increase oil production capacity beyond 13 million bpd for the next three years: 2025-2027, reverting to its 12 million bpd capacity in 2028 (Narayanan 2024). However, the Brent crude oil market price drop began in April 2025, when Riyadh repeated it would increase production in line with President Trump’s announcement on tariffs. This is a bold strategy by the Saudi government as its national breakeven oil price is around 82 USD according to Bloomberg (Daoud 2025). Selling less at a higher price has been the strategy, but Saudi is now in a budget deficit because of its 2030 Vision infrastructure projects such as building futuristic cities and preparation for the 2034 FIFA World Cup to diversify its economy away from oil. These projects mean that Saudi Arabia is also preparing itself to be in a budget deficit at least for the rest of the decade. Yet, by helping lower oil prices, a Trump campaign promise, Saudi Arabia successfully made a 600 billion USD investment deal with the United States, including 142 billion USD in defense (Cameron 2025). While fiscally risky to spend more, this deal is a gamble for Crown Prince Mohamed bin-Salman by leveraging his personal relationship with President Trump for possible support at a later date.
The other OPEC+ members are driving the price of oil down as there is consideration to increase production together with Saudi Arabia in July 2025. Countries such as Kazakhstan, Iraq, and the United Arab Emirates have been producing 350,000 to 440,000 bpd over their OPEC+ production ceiling as of March 2025. This is mostly due to external fossil fuel companies, such as Chevron and ExxonMobil, investing billions into the oil and gas industries of these countries (Reed 2025). Other OPEC+ members: Algeria, Kuwait, Oman, and Russia, are increasing production. Most importantly, Russia, following its recent loss of possibly a third of its strategic bombers, reiterated it will not end its invasion of Ukraine, elongating the outlook on the war further. Thus, Russian oil refineries are still targets. Additionally, the U.S. and EU are coordinating their sanction efforts to hinder Russia’s energy industry after the EU released its latest plan to end its energy ties to Russia by 2027 and released a new sanctions package targeting Russia’s energy shadow fleet.
The geopolitical effects on fossil fuels
The contrasting approaches to energy and climate policy between the Biden and Trump Administrations highlight a significant shift in the United States' trajectory regarding greenhouse gas emissions and fossil fuel reliance. Under Biden, substantial legislative efforts aimed at decarbonization and environmental protection were made, with ambitious goals set for achieving net-zero emissions by 2050. However, the Trump Administration has marked a stark reversal, characterized by aggressive fossil fuel promotion and a systematic dismantling of climate initiatives. This pivot jeopardizes the progress made under the Biden Administration, but also positions the U.S. in a precarious geopolitical situation, as no one can no longer view the country seriously regarding its commitment to climate action.
The implications of these policy shifts extend beyond domestic borders, affecting global energy markets and the U.S.'s standing in international contexts. As the Trump Administration embraced a "drill, baby, drill" mentality, the U.S. will probably fall behind in the global transition to renewable energy, likely ceding leadership to countries like China and members of the EU. The volatility in oil prices, exacerbated by geopolitical tensions and U.S. trade policy, further complicates the U.S. energy landscape as U.S. producers cannot expand production further at current prices. With OPEC+ countries adjusting their production strategies in response to these developments, the future of U.S. energy policy remains uncertain. Ultimately, the fossil fuel industry may find itself at a crossroads, grappling with the consequences of prioritizing short-term gains over long-term sustainability, while the global community increasingly shifts its focus toward cleaner energy solutions.
Thus, the U.S. is set on a likely path toward energy submission due to its leadership closing itself off from the energy transition at a critical juncture. The EU and China have the upper hand to determine what the energy transition looks like for themselves and many countries, including the U.S., but it is easier said than done. The EU is aiming to execute the necessary climate targets made during the previous Commission. Yet, it risks falling behind as a climate leader, trying to balance economic needs with the energy transition, making itself the nominal driver of climate action without having the wheel. However, the previously mentioned plan to end reliance on Russian energy, likely means the EU will continue its strong showing in low- and zero-carbon energy development for the remainder of this Commission. This plan targets Russia, but if clean energy sources keep pace with demand, the EU could reduce its consumption of fossil fuels below current forecasts and reduce its reliance on authoritarian petrostates. The EU may find itself surrounded by countries against its climate, economic, and value-based interests: a Trump-led U.S., Russia, and OPEC members in the Middle East and North Africa, making the energy transition vital geopolitically.
While the EU is finding its way forward to guide climate action and thus, the future of fossil fuels, China has found its role by being the center of manufacturing and deployment of renewable energy. China is an energy powerhouse, consuming enormous amounts, but also deploying massive amounts of renewable energy and storage, being responsible for half of such growth in 2024. China also has the monopoly on photovoltaic (PV) development controlling 80% of the entire PV supply chain. The EU and the U.S. ceded their position on PV manufacturing over the last decade, thereby handing the keys to the quickest clean energy source to deploy over to a strategic competitor. China, while making significant efforts in its energy transition, is still a major consumer of domestic coal and oil from Russia, Malaysia, and Saudi Arabia. By doing this, China could be playing the long game. By taking from countries reliant on fossil fuel exports and locking them in place to sustain its economy in the short-term, China could execute the energy transition and improve its international standing, leaving prickly petrostates such as Russia, Saudi Arabia, and the U.S. on its current trajectory, to their fate.
The last actor requiring analysis on fossil fuels is India as it also is balancing economic growth with decarbonization. Since the second Russian invasion of Ukraine in 2022, it has served as an intermediary between Russia and the global oil market, helping Russia and prospective buyers avoid sanctions. India is also looking to import currently sanctioned Iranian oil as it surpassed China to become the leading oil demand driver and has been massively reliant on coal. However, India could be following the Chinese strategy and be a key player in the global energy transition, albeit on a longer timeline. This has been demonstrated by decarbonization efforts of 45% of installed capacity being from renewable energy sources and relatively strong investment showings in climate investment. India, unlike the U.S., appears to be on a path toward finding a decarbonized future with a forward-minded economy, the only question is how it can be influential internationally on the level of the EU and China.
Conclusion
The United States is no longer on a path toward sustained decarbonization. While the IRA and other legislation appeared to be a serious attempt to reorient its energy system, subsequent policy choices: promoting oil production even at a loss, ending energy transition incentives, and removing regulatory capacity, prevent this reorientation from happening. Climate policy is no longer a concept within the U.S. federal government and has been replaced with isolating, unsustainable, and ideological missions to leave the U.S. behind in the long term. In this vacuum, other actors are seeking, with difficulty, to fill it. OPEC+ is determined to obtain whatever revenues are available while they can, hoping to assert control over global supply with little regard for decarbonization. China continues to build out renewable capacity while still relying on coal, underscoring its focus on energy resilience and self-sufficiency rather than global climate alignment. The European Union remains the most consistent actor in its regulatory ambition but lacks the political and economic unity to shape global energy trajectories. With the United States stepping back, the coordination gap in climate policy deepens, and the likelihood of meeting shared goals continues to recede. If no major actor steps forward to coordinate or enforce ambitious climate action, global efforts will devolve into isolated, inconsistent, and ultimately insufficient responses to a worsening crisis.
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