Two words that describe the 2016 presidential election: low energy.
Despite the passionate and at-times colorful conversation on immigration, national security and jobs, Democratic candidate Hillary Clinton and Republican candidate Donald Trump have spent relatively little time discussing energy policy.
“Energy issues are not the first things out of their mouths—that’s a little disconcerting,” says Paige Anderson, director of government relations for NACS, Alexandria, Va. Energy used to be one of the top issues presidential candidates targeted in previous campaigns, says Anderson. Finding details on the candidates’ energy policy is a challenge in itself. At Clinton’s campaign page, energy is part of a wider discussion on climate change, and at Trump’s, it is part of a multibulleted economic proposal.
Maybe it’s the combination of sustained low energy prices and high domestic production that has made energy a nonissue. Regardless, there is no doubt that the next president of the United States will have a big effect on the fuels business in the decades to come.
Consider President Barack Obama’s introduction of tougher Corporate Average Fuel Economy (CAFE) targets, new underground storage tank (UST) regulations and continuation of the Renewable Fuel Standard (RFS) blending mandates.
While energy may not be the first talking point, there are enough policy proposals and candidates' comments to get a feel for how a Clinton and Trump White House would define its priorities.
Cutting Consumption?
The consensus on Clinton: Her administration would essentially be a third Obama term when it comes to energy. Some argue it might be even more ambitious in its regulatory reach.
“Hillary would continue Obama’s legacy and expand on it,” says Sherri Stone, vice president of Petroleum Marketers Association of America (PMAA), Arlington, Va. Stone cites Clinton’s proposal to crack down on fracking, deliver on Obama’s pledged greenhouse-gas cuts at the Paris climate conference, and her support from environmental groups.
Among Clinton’s proposals is a pledge to slash U.S. oil consumption by a third through “cleaner fuels” and “more efficient” cars and trucks. She would cut federal subsidies for the oil and gas industry, and defend and extend vehicle pollution and efficiency standards (see CAFE standards) as well as the Clean Power Plan. Electric vehicles (EVs) are a preferred technology, as well as energy alternatives such as solar.
“She’s going to focus on trying to create manufacturing and other jobs in this alternative energy, green-energy space,” says Anderson. “The question is: It’s great to have programs to encourage, promote and invest—but what does it mean in terms of mandates?”
While Anderson expects that Clinton would continue the same regulatory drumbeat as the Obama administration on everything from the RFS to ozone rules to UST regulations, her approach may be different.
“We are hopeful she will have a very experienced staff and will definitely have people who have been in the industry. And hopefully some of their practical, pragmatic experience will [create] more of an open-door policy,” says Anderson. “The policies themselves will be the same, but hopefully the process will be a little bit more open and inclusive.”
Trump’s energy proposals run in the opposite direction of Clinton’s, including opening up more federal lands to exploration and drilling, rescinding the Clean Power Plan and Waters of the United States Rule, and canceling the Paris climate commitments.
“Trump will be far better for marketers and retailers,” says Stone of PMAA, pointing out Trump’s pledge to end Obama regulations on the oil industry and his criticism of the Environmental Protection Agency (EPA), which he has suggested turning into a commission.
Trump is clearly focused on reducing the regulatory burden on the energy industry, but Anderson of NACS would like to see more details from the candidate.
“We would like to see some more specifics from the campaign and be able to talk about energy in a more holistic way,” she says. “It’s good to focus on production, but we have to look further downstream. What types of fuel does he want to see us using, what vehicles does he want to see Americans driving 20 years down the road?”
This includes specifics at the distribution and terminal level, and at the retailer level in terms of how they store, dispense and label fuels.
“It’s good that he wants to take the red tape away,” says Anderson, “but there are not enough specifics on what that means.”
Iowa Standards
When it comes to ethanol, what happens in Iowa may stay in Iowa, interviewees caution.
While both Clinton and Trump embraced ethanol and the RFS during the Iowa caucuses, this does not necessarily reflect what will be their final, national approach to the renewable fuels act, Anderson says.
“In the case of a Clinton administration, we would foresee they’re going to continue to implement the RFS,” says Anderson.
But there are signs that Clinton is game for cracking open the hood. In August, Reuters reported that Clinton advisers had visited with officials of the California Air Resources Board to discuss the state’s market-based Low Carbon Fuel Standard. There was speculation that such an approach would replace or enhance the mandate-based RFS.
While the Clinton campaign has insisted it would keep the RFS in place, it does believe it could be improved to further boost advanced biofuel development and access to E15, E85 and biodiesel, and provide investment certainty.
“Everyone agrees there need to be changes,” says Anderson. “We hope the changes are in making sure if we want to expand and have more ethanol fuels in the marketplace, looking at equipment capability and misfueling liability. It could make the program more successful and give us an opportunity to sell more.”
E15 is another key fuel with which a new administration and the industry can get traction—specifically with the prohibition in much of the country on selling the ethanol blend during the summer because of Reid Vapor Pressure issues.
“Our retailers who want to sell E15 want to get into that marketplace and sell it all year round,” says Anderson. “Our hope is a Clinton administration would be supportive of getting that done.”
Trump, meanwhile, has also embraced the RFS, and named pro-ethanol Iowa Gov. Terry Branstad to his team of advisers. During the primary, he said the EPA should match the statutory level Congress set for biofuels under the RFS. At the same time, Trump has slammed government mandates in general.
If Trump sticks to his larger, pro-business talking points, Anderson is hopeful that he would invite fuel retailers to “have a seat at the table” when looking at fuel policy, including the RFS.
“The problem is, he’s said both things, so it’s hard to get a read where he is actually,” says Stone of PMAA. “He has come out in favor of the RFS. At the same time, has made comments that suggest he could change his mind.”
Then there are money matters.
Perhaps no issue symbolizes the financial implications of transportation fuels as much as infrastructure funding. The federal excise tax on gasoline has sat at 18.4 cents per gallon since 1994, when President Bill Clinton oversaw its last increase. Revenues from the tax feed into the Highway Trust Fund, which supports the maintenance and construction of roads and other transportation infrastructure. They have also fallen woefully short of true financial needs.
Neither candidate has come out in support of raising the federal gas tax, although both have proposed billions in infrastructure spending, differing on how they would pay for it. Clinton would invest $275 billion, paying for it through business tax reform. Trump has proposed nearly doubling this investment, with infrastructure bonds as a possible means to finance it.
From Anderson’s point of view, the difference is in the degree of change.
“You could see revenue generators—tax increases or a tax decrease—in targeted ways under a Clinton administration,” says Anderson. “Under a Trump administration, their inclination will be overhaul, reform, look at tax policy in a different way and really cutting taxes for corporations.”
Of course, all of these policy proposals are moot if a President Clinton or Trump cannot get support from Congress. Clinton may have an edge with her experience as a senator for New York, where she demonstrated an ability to work across the aisle. Anderson is hopeful she would be more open to working with Republicans than she believes Obama has been. Trump is more of a wild card.
Despite the parsing of comments and policy, fuel retailers should not expect seismic changes in energy policy in the next presidential term.
“You won’t see dramatic change in either administration,” says Anderson about fuels issues such as RFS. “We will roll up our sleeves and make it work.”
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