President-elect Donald Trump reacts during a MAGA victory rally at Capital One Arena in Washington, DC, on January 19, 2025, one day ahead of his inauguration ceremony.
Jim Watson | Afp | Getty Images
President Donald Trump on Monday declared a national energy emergency and ordered the U.S. to withdraw from the Paris climate agreement, as he seeks to implement a sweeping agenda aimed at boosting fossil production.
“The inflation crisis was caused by massive overspending and escalating energy prices and that is why today I will also declare a national energy emergency. We will drill, baby, drill,” Trump said during his inaugural address. The president promised during his campaign to slash energy costs in half within the first year of his administration.
Trump’s declaration directed the heads of federal agencies “to identify and exercise any lawful emergency authorities available to them” to facilitate the leasing, siting, production and generation of domestic energy sources including on federal lands.
“The national energy emergency is crucial because we are in an AI race with China, and our ability to produce domestic American energy is so crucial such that we can generate the electricity and power that’s needed to stay at the global forefront of technology,” a White House official told reporters earlier Monday.
Trump is abandoning the Biden administration’s domestic and international commitments to fight climate change. The U.S. will consider its withdrawal from the Paris climate agreement to be effective as soon as the U.N. ambassador submits notification to the United Nations, according to the president’s executive order. The landmark international treaty seeks to limit rising global temperatures to 1.5 degrees Celsius.
Trump also signed orders to revoke former President Joe Biden’s actions that barred oil and gas drilling in large swathes of the Arctic and in U.S. coastal waters, a move that will likely be contested in court.
He also repealed Biden administration goals for half of all new car sales to be zero-emission vehicles by 2030, to achieve a carbon-free electricity sector by 2035, and to achieve net-zero emissions no later than 2050.
U.S. already largest crude producer
The U.S. has been the largest producer of crude oil in the world for years, outpacing Saudi Arabia and Russia. The CEOs of Exxon and Chevron have said oil and gas production levels are based on market conditions and are unlikely to increase significantly in response to who is in the White House.
“There’s still some upside,” Chevron CEO Mike Wirth told CNBC’s Brian Sullivan in a Jan. 8 interview. “But probably not growth at the rate that we’ve seen over the last number of years as particularly some of these new shale plays begin to mature,” Wirth said.
Exxon CEO Darren Woods told CNBC that U.S. shale production has not faced “external restrictions” under the Biden administration.
“Certainly we wouldn’t see a change based on a political change but more on an economic environment,” Woods said in a Nov. 1 interview prior to Trump’s election victory. “I don’t think there’s anybody out there that’s developing a business strategy to respond to a political agenda,” he said.
There are areas in the Gulf of Mexico that have not opened up due to federal permitting, Woods said at the time. The Biden administration had planned the fewest oil and gas leases sales in history in a five-year program that runs through 2029.
“That could, for the longer term, open up potential sources of supply,” Woods said of increasing lease sales.
There are several emergency statutes Trump could invoke to increase gasoline and electricity supplies, said Glenn Schwartz, director of energy policy at the consulting firm Rapidan Energy. Emergencies are often loosely defined under federal law, giving the president broad discretion to use them as he sees fit, Schwartz said.
And Trump would likely face little pushback from the courts because they are reluctant to challenge presidential determinations related to national security, Schwartz said.
“What you end up with is that even if Trump were to expand his emergency powers in unprecedented ways, it is not clear that courts would step in to halt any of these resulting actions,” the analyst said.
However, there is little the president can do to force more oil and gas production, Schwartz said.
“You can lead a horse to water, but you can’t make them drink,” the analyst said. “He can give them all the resources they need to be able to drill, but I haven’t seen anything that suggests he can force them to take it out of the ground.”
