Trump is reducing environmental regulation to help energy companies. It hasn't worked yet.
President Donald Trump is expected to announce on Thursday afternoon that he will pull the United States out of the Paris Climate Agreement, which will remove the U.S. from a global commitment to cut CO2 emissions in order to fight climate change. The president's reasoning for the long-telegraphed move was that the global agreement to fight man-made climate change is too burdensome on U.S. companies.
It fits with the president's larger strategy on environmental regulation: In less than five months, Trump has reversed dozens of Barack Obama-era rules designed to preserve the environment and fight causes of climate change. Trump has said those regulations hurt coal, oil and gas companies, limiting both their production and ability to put Americans to work.
But to date, rolling back environmental regulations for fossil fuel companies has not improved company revenues or stock prices. There has been a turnaround in hiring in the extraction industries, but it is still nearly 24% below its industry high of 850,000 jobs in September 2014. That's not surprising, as it will take years for some of these regulatory rollbacks to take full effect, if they ever do, and, meanwhile, low prices for oil, gas and coal have cut into fossil fuel company revenues.
Stocks spiked, particularly for coal companies, immediately after Trump's victory. But investors appear to have lost confidence that Trump's policies can increase revenue for companies suffering from a glut in supply of natural gas or a drop in coal production that demonstrates low demand.
Worse yet for many fossil fuel companies, their stock prices show that the changes have not boosted investor confidence that coal, oil and natural gas companies will rebound in the future. And, immediately after the reports emerged that the U.S. would withdraw from the Paris agreement on Thursday, coal company stocks fell again.
For instance, a Mic analysis shows the stock prices of the five largest offshore drilling companies have all fallen since Nov. 9, 2016 — the day after Trump's victory. Stock prices for four of the five largest U.S.-based oil and gas producers have also dropped since Trump won.
Perhaps most surprising is how, in that same period, stock prices have fallen for U.S. coal companies, Mic found. Stock prices for the three-largest publicly traded coal producers, who mine more than half the country's coal, have not recovered from major losses seen before the election.
Peabody Energy, which dug 351 million pounds of coal in 2015, went bankrupt in April 2016. Peabody has lost more than 20% of its value since its stock was reissued at the beginning of April this year — a move that came after Trump struck down Obama's Clean Power Plan and a rule that prohibited coal companies from dumping waste in streams.
Another top coal producer, Cloud Peak Energy, has lost 59% of its value since the day after Trump's victory. Alpha Natural Resources, a privately owned top-five coal producer, announced Tuesday it was divesting entirely from coal and natural gas holdings in West Virginia.
The White House has been careful not to offer specific projections on how many jobs will be created by these changes. But in broad strokes, the administration has promised that rolling back environmental regulations will lead to higher employment. "I made [coal miners] this promise we will put them back to work," Trump said when he rolled back Obama's rules restricting power plant pollution.
And while Obama closed off millions of acres of federally-controlled seafloor north of Alaska to development last year, Trump announced at the end of April "we're opening it up" to oil and gas drilling. Vice President Mike Pence promised that move would create jobs.
Schlumberger Limited, the country's largest offshore drilling company, already has operations in Alaska . But the current price of oil — at $49 a barrel — is nearly as low as it was when Trump was elected and near its lowest for 2017. It is 60% higher than the roughly $30 per barrel oil hit in early 2016, but well below the $80 to $100 a barrel price range oil hovered at between 2011 and 2014. That makes expanding drilling activity for more oil and gas, at least in the near future, unlikely.
And the stock price for Schlumberger? It's down about 13% since Trump's victory.