COMMODITIES 2025: Trump executive orders to set stage for oil, gas regulations rollback

This is part of the COMMODITIES 2025 series where our reporters bring you key themes that will drive commodities markets in 2025.

US President-elect Donald Trump will attempt to drive a speedy overhaul of the regulatory environment for the oil and gas industry via high-profile executive orders, but the most significant effects of his policy agenda won't be felt for months or years, experts told S&P Global Commodity Insights.

Trump, whose key energy campaign pledge was to "drill, baby, drill," has promised to make the US "energy dominant" in his second term. He is likely to reverse a number of early executive actions by President Joe Biden, including again removing the United States from the Paris Agreement, reapproving the Keystone XL pipeline project and reopening large swaths of the Arctic National Wildlife Refuge and National Petroleum Reserve-Alaska to leasing.

It is also expected Trump will immediately revoke Executive Order 13990, issued on the first day of Biden's term, which directed all federal agencies to place the "climate crisis" at the forefront of its rulemaking, and issue a new executive order instructing federal agencies to roll back restrictions on oil and gas production on federal lands and waters.

"The American people reelected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail," Karoline Leavitt, spokesperson for the Trump transition team, said. "He will deliver."

Those headline-grabbing moves, though likely to come in the early days of Trump's presidency, will merely point toward more impactful but slower regulatory changes in the years to come, experts said.

"A lot of the things that have a bigger impact, they have to work their way through the system," Anna Mosby, senior research analyst for Gas Power & Climate Solutions at Commodity Insights, said. "You can't force EPA to immediately issue a new rule. It might take three years. But asking EPA to review these regulations sends a pretty strong signal. It charts a path."

The latest Commodity Insights North American Short-Term Crude Outlook projects US crude production growth of 445,000 b/d in 2025, to an average annual output of 13.7 million b/d, up from 2024's already record-setting production levels, before a projected demand-driven decline to 13.6 million b/d in 2026.

Fast action

Trump and Republicans in both houses of Congress will take aim at Biden's environmental policies in 2025 as part of their attempt to extend Trump's 2017 Tax Cuts and Jobs Act. A number of Inflation Reduction Act subsidies are expected to be curtailed or eliminated to pay for TCJA, with Republicans and industry groups most vocally targeting the IRA's $7,500 electric vehicle consumer credit.

Despite a thin Republican majority in the House -- and uncertainty about whether the conference will split their priorities into two bills, one for energy and border security and another comprising tax, through the budget reconciliation process -- Majority Leader Steve Scalise said he expects the body to pass Trump's top priority quickly.

"Failure is not an option," Scalise told a Business Roundtable audience at a panel discussion Dec. 10.

If congressional Republicans maintain that unity, the death of climate-oriented IRA policies -- not only tax credits but new IRA-funded Department of Energy programs distributing loans to clean energy projects -- could be the quickest impact felt by the US energy industry.

Trump's threatened 25% tariffs on Canada and Mexico, which could include the millions of b/d of Canadian crude imported to US refineries, could have a short-term effect on production and gasoline prices in the coming year. Stricter sanctions on Venezuela, Iran and Russia could be imposed immediately. Biden's support for international climate pacts reducing investment in fossil fuel production in foreign countries, and his commitment to a global methane pledge, could also be swiftly overturned by the Trump White House.

Regulations take time

Federal agency regulations take longer to impose.

According to the Congressional Research Service, new five-year offshore oil and gas leasing programs -- a top priority of the oil and gas industry for in the incoming administration -- typically require between two and three years to develop. In 2014, then-President Barack Obama passed the Clean Power Plan, which Trump directed his agencies to review when he took office in 2016; his Affordable Clean Energy Rule wasn't finalized until 2019.

Moves to erase Biden-era policies that raised the costs of leasing on federal lands, created a methane fee for production facilities, promulgated stringent new tailpipe emissions standards for vehicles, strengthened the Waters of the United States Rule, promoted Net Zero goals within agencies and required public companies to disclose climate-related information in their annual reports, among others, would all require lengthy rewrite and public comment periods. Many of Biden's regulations face ongoing legal challenges.

Still, relative to many companies' investment timelines, even the lengthier regulatory timeline provides challenges. Executive orders with immediate impacts can also be viewed with skepticism. In November, ExxonMobil CEO Darren Woods urged Trump to remain in the Paris Agreement for the sake of policy continuity. US oil majors have avoided most recent ANWR lease sales, leaving them to local Alaskan agencies, while industry interest in restarting the Keystone XL pipeline project is uncertain.

"The asset life of investments is 40 years," Travis Fisher, director of energy and environmental policy systems at the Cato Institute, said. "The thing I keep hearing from industry across the board is that people want certainty -- they just want to know what the rules are going to be. It's really frustrating to operate on four-year executive branch cycles. It's easy come, easy go."