Just over two weeks into Donald Trump’s presidency, Congress, the media and political observers are all collectively catching their breath. The executive orders have come quickly, addressing many of the president’s campaign pledges, and few actions have lasted more than a single news cycle.
A few weeks ago, we saw U.S. District Court Judge James Robart issue a temporary restraining order blocking the president’s travel ban, a disagreement with Australian Prime Minister, and the nomination of Neil Gorsuch for the U.S. Supreme Court. There were also encouraging jobs report numbers that suggest that amid everything taking place, business leaders and the economy are optimistic about the Trump administration’s planned reforms.
A central question for critics and cautious supporters of then-candidate Trump’s intention to bring back American jobs that had gone to Mexico or overseas was whether any president could replace lost occupations in fields that have simply contracted over decades due to factors such as automation.
Although President Trump ran up massive margins with blue-collar constituencies ravaged during the Obama era (like coal miners), his plan may ultimately bring jobs back to those workers via another part of the energy sector. In reviving the Dakota Access and Keystone XL Pipelines by executive order, Trump may have tapped into the industry that will prove to be his economic ace in the hole.
Two weeks ago, Fundstrat Global Advisors’ managing partner and head of research, Thomas Lee, CFA, told CNBC’s Worldwide Exchange that the energy sector could see 10 percent growth under President Trump. “We know 40 percent of the economy was in recession, because it was transports, industrials, energy,” Lee said. “Just energy margins going back to median will add almost $10 to S&P profits. That's almost 10 percent growth from one sector.”
Energy expert Ellen R. Wald, PhD, wrote in Forbes regarding Keystone XL that while a number of the jobs created during initial construction of the pipeline would be short-term.
The pipeline would send more products to be handled and refined in the Gulf region, increasing employment there to some extent, and it may increase investment in oil producing regions in the U.S. and Canada. The pipeline would also undoubtedly enhance state revenues and facilitate long-term economic development in the Gulf Coast region.
She concluded that, “Building the pipeline could be the first step in improving energy security for North America.”
Mark P. Mills, CEO of Digital Power Group and a senior fellow at the Manhattan Institute, touted the benefits of the Dakota Access Pipeline. “Finishing the Dakota Access project will serve as an immediate stimulus to the Bakken shale field,” he wrote. “Transporting crude by pipe rather than rail is so much cheaper that it’s the equivalent of giving those drillers a 30 percent profit boost — profits that will lead not only to more jobs but also fewer deficit-creating imports.”
And while the contributions to the nation’s economic output required to build the pipelines ($3.4 billion for Keystone XL and $3.5 billion for Dakota Access) represent only 0.02 percent of the $18 trillion U.S. GDP, Jim O’Sullivan, chief U.S. economist at High Frequency Economics, noted that the intangible effects of Trump’s business-friendly approach should not be overstated. “[Trump’s orders] reinforce the message that the federal government has become much more pro-business,” O’Sullivan said.
A pro-business approach to energy could play a huge role in helping to truly make America great again.