Analysis by Energy Workforce President Tim Tarpley
On Friday of last week, Speaker Johnson was voted in to lead the House in the 119th Congress. The final vote tally ended up being 218-215 after some last-minute drama in which a few Republican members withheld their votes. Ultimately, it appeared that up to 9 members could withhold their support; however, the majority of this group ultimately ended up voting for Johnson. The manufactured drama was more to remind him that there were enough members to meet the new threshold to recall him should they choose at a later date than a real attempt to choose another option. The exercise was a reminder of how difficult it is for any speaker to govern a body with such close margins as it only takes a few members to buck the system.
With this narrow majority, Speaker Johnson will have his work cut out for him in the coming months as he works to deliver on a number of major policy issues that will need to be addressed. First on the agenda will be a budget reconciliation package that will be needed to clear the deck for a number of must-pass items. Johnson has told his conference that President-Elect Trump would like one big package as opposed to multiple bills to use the reconciliation mechanism to avoid a potential Democrat filibuster in the Senate. This is significant for us as Republicans in the Senate had been urging a two-bill approach with border security and defense spending first coupled with much of the energy deregulation and permitting reform provisions that did not make it over the finish line last year. With the one-bill approach, it is unlikely that permitting reform will be able to be included as it will likely not meet the requirements for a budget package. This likely puts permitting reform on the back burner until later this year. The US energy industry has been advocating for these reforms for many years, and they are vital to our ability to meet future energy demand.
On Monday of this week, President Biden issued an executive order to remove 625 million acres out of consideration for future offshore drilling. The ban includes areas along the Atlantic and Pacific coasts, the eastern Gulf of Mexico and portions of the northern Bering Sea off the Alaskan coast. Some of these areas had been previously removed until 2035 by the first Trump administration, and although little planned oil and gas activity occurs in the areas now, it’s possible that with new technologies, some of the areas could be considered at a later date. Also of concern is that procedurally, the way the current law is written, a President has the authority to remove acreage from drilling consideration, but it will take an act of Congress to bring it back. EWTC believes it sets a bad precedent for any President to remove areas from leasing. Along these lines, President Trump has already indicated he would do all he can to reverse this decision if he is able, but likely Congress will have to get involved given the way current law is written. This will be difficult as not all of the Republican caucus is on board with some of those regions especially those surrounding the east coast and Florida.
Another issue that we are watching closely is the development of the trade and tariff policy of the incoming Trump administration. President-Elect Trump has indicated that he plans to start with a 25% tariff on imports from Canada and Mexico and additional tariffs on China and has floated the potential for a 10% across-the-board tariff on all other imports. He has indicated that this action could come as soon as January 20th via executive order after he is sworn in. Details of this plan are still being finalized, and there are numerous conflicting reports about how it will all work out. There was some reporting early this week that the initial round would be targeted at certain products (including components used in energy production); however, these reports were later strongly denied by President Trump directly. As of now, it is safe to assume that there will be some round of tariffs via executive order on or around January 20th and that there may be a significant disruption to global supply chains. EWTC is working closely on this issue to ensure that the impacts on our sector will be as minimal as possible. EWTC is hosting a weekly tariffs task force call to share best practices and information and to coordinate sector actions on the issue. If you would like to add yourself to the task force, please click here.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
