President Donald Trump’s White House has said his plans to slash environmental regulations will trigger a new energy boom and help the United States drill its way to independence from foreign oil. But the top U.S. oil and gas companies have been telling their shareholders that regulations have little impact on their business, according to a Reuters review of U.S. securities filings from the top producers, according to Reuters.
In annual reports to the U.S. Securities and Exchange Commission, 13 of the 15 biggest U.S. oil and gas producers said that compliance with current regulations is not impacting their operations or their financial condition. The other two made no comment about whether their businesses were materially affected by regulation, but reported spending on compliance with environmental regulations at less than 3 percent of revenue.
The dissonance raises questions about whether Trump’s war on regulation can increase domestic oil and gas output, as he has promised, or boost profits and share prices of oil and gas companies, as some investors have hoped.
According to the SEC, a publicly traded company must deem a matter “material” and report it to the agency if there is a substantial likelihood that a reasonable investor would consider it important. “Materiality is a fairly low bar,” said Cary Coglianese, a law professor at the University of Pennsylvania who runs the university’s research program on regulation. “Despite exaggerated claims, regulatory costs are usually a very small portion of many companies’ cost of doing business.”
The oil majors’ annual filings come after the industry and its political allies have spent years criticizing the Obama administration for policies aimed at reducing fossil-fuel consumption, curtailing drilling on federal lands and subsidizing renewable energy. Trump promised during the campaign that a rollback of the Democratic administration’s policies would help free the nation from reliance on imported oil.
“Under my presidency, we will accomplish complete American energy independence,” said Trump, describing regulation as a “self-inflicted wound.”
The Trump administration is now preparing an executive order – dubbed the “Energy Independence” executive order – to roll back Obama-era regulations, which could be signed as early as this month, according to administration officials.
U.S. presidents have aimed to reduce U.S. dependence on foreign oil since the Arab oil embargo of the 1970s, which triggered soaring prices. But the United States still imports about 7.9 million barrels of crude oil a day – almost enough meet total oil demand in Japan and India combined.