Breaking old alliances and revolutionizing the status quo after World War II would have been impossible for any US president due to the insatiable thirst for energy in the United States. But Donald Trump’s White House has a trick to improve its energy autonomy thanks to an increasingly crucial hydrocarbon that also serves for.
The United States, which in a period of approximately seven years went from being an irrelevant GNL supplier to the largest in the world, is preparing to expand its production capacity by 60% during Trump’s second presidency, according to a Bloomberg estimate. By the end of the decade, almost one in three cistern ships that transport this fuel will come from the United States, which gives Trump. A promise that repeated during the electoral campaign.
Paradoxically, the president’s unorthodox policies to distance the United States from his allies are not harming the demand for American natural gas. Who would have said it taking into account that in the first weeks of his second term he sought to negotiate a peace agreement for Ukraine without the support of his historical allies (not even that of Ukraine), imposed tariffs on his commercial partners and promised a quirky idea to solve the near East crisis.
Despite all these pulses, European leaders, India and Japan have responded with promises to buy more American gas. “It is amazing to think that the president of the United States does not have to worry about imported energy when negotiating peace in the Middle East or in the European continent,” says Amyrs Jaffe, professor at the University of New York, who teaches about energy and climatic financing. “That means you can lead those debates from a position of power.”
Trump frequently speaks of his plans to, the oil extracted by hydraulic fracturing, and even accused former President Joe Biden of containing himself in the development of fracking for concern about climate change. However, already a difference from LNG, American crude oil production will only grow, approximately 2.9% this year.
Meanwhile, the shale industry expects to exploit future drilling locations. The Permica basin, the largest oil basin in the country, between Texas and New Mexico, could reach its peak of production in 2028, the last full year of Trump’s mandate, before stagnating, according to S&P global. Likewise, the promise of the Secretary of the Treasury, Scott Besent, to increase oil production by three million barrels per day as part of its plan “3-3-3 ″ to boost the economy, which also includes reducing the fiscal deficit to 3% of GDP and maintaining growth in 3%, it will probably only be achieved if it is measured in barrels of the so-called oil equivalent, which includes the gas, says Raoul Leblanc, an analyst. S&P global.
Petroleum “is probably not going to grow significantly in the short term,” said Secretary of Energy, Chris Wright, in an interview with Bloomberg TV in February. However, he also pointed out that US gas production will grow drastically in the short and medium term. The gasist faith of the new administration summarized it precisely by Vice President JD Vance during an act of the last electoral campaign held in Pennsylvania: “In the United States we are sitting on the Saudi Arabia of natural gas. We simply have to release all its potential.”
Diplomacy
20 years ago, the idea that natural gas would play an even more important role than oil in US diplomatic calculations would have been absurd. In early millennium, the United States had gas shortage. This raw material generated less than 15% of the country’s energy, and was exceeded by nuclear energy and coal. Even the then president of the Federal Reserve, Alan Greenspan, asked to largely raise imports to address the internal supply deficit that the country suffered.
Horizontal drilling and hydraulic fracturing or frackingwhich charged impulse in the early 2000s, changed all that. Both techniques released oil and gas reserves previously inaccessible from North Dakota to New Mexico. The United States duplicate its natural gas production, reaching more than 100,000 million cubic feet (about 3,000 million cubic meters) per day, and now supplies 41% of the country’s electricity.
In fact, the supply of shale gas increased so quickly during the last 20 years that dwelling domestic demand, which caused a decade of instability in which it harmed the profits of the producing companies. The industry sought new ways to exploit its gas, including the construction of petrochemical plants for the manufacture of plastics throughout the coast of the Gulf of Mexico. But the key is to export it, especially since international clients are willing to pay higher prices.
Europe needs a long -term substitute for Russian supplies; Asia needs fuel for its rapid growth economies, and the developed world, in general, needs more energy to meet the demand of data centers that drive artificial intelligence.
An increasing number of companies, including Cheniere Energy and Venture Global, have rushed to build multimillionaire liquefaction facilities to address the international market. These plants can cool natural gas at -160 ° C, transforming it into a liquid state that specialized ships transport abroad, where it regulates. Eight of these plants are already operating in the United States, three more are under construction and several projects are ready for development in the absence of the final investment. Trump also tries to revitalize a stagnant project for a long time: LNG in Alaska.
Although he was not a friend of the oil and gas industry, Biden promoted the GNL agenda established in Trump’s first mandate in 2022. US supplies to Europe could replace the gas that the continent transported from Russia, which would help deprive President Vladimir Putin of “The War Machine,” said Biden. The Netherlands, France and the United Kingdom quickly became the largest American LNG buyers. The president of the European Commission, Ursula von der Leyen, then praised Biden for being a “reliable” partner and said that the transatlantic relationship was “stronger and more united than ever.”
Considered in its day as a transition fuel to help the world abandon coal and move towards renewable energies ,. The strength of its demand could have serious consequences in the fight against climate change, which requires reductions in all fossil fuels, including natural gas, if the world is intended to reach zero net emissions by 2050. “It was said that natural gas was a bridge fuel,” says Mike Sommers, executive director of the American Petroleum Institute. “However, it is clear that natural gas is the fuel of the future,” he warns.
Natural gas prices in the United States have averaged $ 3.55 per million British thermal units (BTU) in the last five years, approximately 70% less than the European average, which provides the American economy with an important competitive advantage and contributes to Biden and Trump policies to recover US manufacturing production from abroad.
“Energy is the basis of every economy, so the fact that the United States can stock up at a low price and export more and more to the rest of the world is a huge advantage,” says Arjun Murti, a partner of Veriten, a research firm and energy advice. On the other hand, Europe has experienced a strong tendency to deindustrialization, especially in Germany.
The meteoric growth of the American gas industry ran into an obstacle in the last year of the Biden presidency, when its administration imposed a moratorium on new LNG export licenses while analyzing its impact on climate change. Trump raised the suspension on his first day of mandate, not to mention the climatic concerns that led Biden to suspend the approval. Nor was a phrase mentioned that Trump’s previous department of Energy tried to coin without success in 2019 to promote American LNG in front of the supplies of Russia and the Middle East: “Freedom Gas.”
Dependence
The expansion of the production and exports of gas in the United States contrasts with the state of the American oil industry. While it is the greatest in the world, it does not give Trump the geopolitical weight enjoyed by OPEC and its de facto leader, the heir prince of Saudi Arabia, Mohammed Bin Salman. Although the United States extracts around 13.5 million barrels per day, approximately 50% more than Saudi Arabia, growth prospects are limited: low oil prices force producers to reduce costs and preserve what they have left of their potential for future perforations. But if the American natural gas industry continues to grow as expected, this slow growth of black gold may not be worrying.
Europe, which for now depends on the United States for gas, has little room for maneuver. While Ukraine is enraged by Trump’s sympathy by Putin, his largest private energy company, DTEK Group, holds conversations with US vendors for more than one LNG supply contract.
Under the threat of important US tariff increases, Indian prime minister, Narendra Modi, is in negotiations to buy more American LNG to avoid Trump’s tariffs and reduce their commercial surplus with the world’s largest economy.
Trump’s strategy also leads to the danger of moving some key buyers away. China, the largest LNG importer last year, accelerated in February the US gas retaliation tariffs in response to the additional commercial barriers imposed by Washington. And that is not the only risk. With so many new American plants in operation, analysts foresee an excess supply in the market by the end of the decade, which could cause a price drop.
Even so, LNG is usually more expensive than coal and not as clean as renewable energies. And, as China has demonstrated, these two fuel sources can often occur locally without having to depend on imports. “No government wants to depend on import markets, unless you have no other option,” says Myers Jaffe, professor at the University of New York. During the next two years, countries may not have another alternative, he adds. “But we are in a period of so much energy transformation that, within 10 years, there will be an option. The American natural gas market is not infinite,” he warns.
