Energy-Related Executive Orders Under Trump

President Trump issued a number of Executive orders on his first day, which we believe will have a positive near-term impact on our midstream and refining coverage. In addition, the President also withdrew from the Paris Climate Accord.

Unleashing American Energy

Trump’s headline directive calls on federal agencies to review all regulations limiting energy production or usage by eliminating delays in permitting and expediting projects vital to the US economy and security. In doing so, the order promotes energy production and exploration on federal lands and waters. On funding, Unleashing American Energy also pauses subsidies issued under the IRA or IIJA until agencies complete a 90-day review to ensure alignment with new policy. The directive then nullifies some of Biden’s energy/environment executive orders, such as the EV mandate, LNG export pause, emissions waivers limiting gasoline-powered cars, or the Green New Deal.

Putting America First in International Environmental Agreements

This mandate withdraws the US from the Paris Agreement and rescinds the US International Climate Finance Plan, as well as any UN Convention on Climate Change commitments. The reallocated funds are to prioritize economic efficiency, consumer choice, and fiscal restraint in all foreign engagements that concern energy policy.

Initial Rescissions of Harmful Executive Orders and Actions

This order rescinds Biden administration orders that are incompatible with Trump’s stances on areas such as climate change. The mandate repeals previous measures to restrict oil/natural gas leasing, investigate climate-related financial risk, and implement the energy provisions of the IRA. Thereby, the order eases the increased regulation of energy businesses under Biden and pauses financial support for clean energy initiatives.

Declaring a National Energy Emergency

This order allows executive departments/agencies to exercise any lawful emergency authorities available to them to facilitate the generation of domestic energy resources on US land and expedite the completion of all authorized energy infrastructure. It allows the Administrator of the EPA and Secretary of Energy to consider issuing fuel waivers to allow the continuous sale of E15 gasoline to meet any temporary shortfalls in gasoline supply. It also allows exemptions from the Endangered Species Act requirements. This is meant to ensure energy prices are not high and there is adequate energy supply.

Unleashing Alaska’s Extraordinary Resource Potential (LNG)

This order establishes a policy to use Alaska’s natural resources. It orders agencies to review current restrictions that limit resource development in that area, and it further tasks agencies to expedite projects critical for developing Alaska’s resources (particularly prioritizing the development of Alaska’s LNG industry and Trans-Alaska Pipeline System).

Temporary Withdrawal of All Areas on the Outer Continental Shelf

The order reviews current wind practices and pauses all consideration for new/ renewed wind energy leasing. It applies to wind leasing for electricity generation purposes but not for oil, gas, minerals, and environmental conservation purposes. It doesn’t affect the rights under existing leases, but the Secretary of the Interior is to
review these.

Delivering Emergency Price Relief and Defeating Cost-of-Living Crisis

Due to rising costs for fuel, food, housing, automobiles, etc., the order mandates all executive agencies to deliver emergency price relief. This includes endeavors to decrease housing expenses, expand housing supply, create job opportunities, etc. It also calls for the elimination of any detrimental climate-related policies that increase costs.

Valuation Method and Risk Statement

Key risks for pipeline partnerships include the following: unexpected prolonged and precipitous decline in commodity prices; interest rate risk; risks associated with leverage; environmental risks; and regulatory risks associated with the Federal Energy Regulatory Commission’s governance over pipeline tariff rates. Key risks for marine transportation partnerships include the following: OPA 90 costs; potential changes to the Jones Act; and environmental risks. Key risks for coal partnerships include: reliance on third party operators; decline in coal prices or production; and environmental risks. Key risks for propane partnerships include the following: weather (particularly warm winters) as with all propane and heating oil distribution companies; prolonged and sharp increases in wholesale prices of propane and heating oil caused by changes in supply or other market conditions; dependence on acquisitions for growth; and interest rate risk (as ALL MLP units, tend to trade inversely with interest rates). Unitholders may be required to file taxes in states where the partnership conducts business and should consult a tax advisor for further assistance. For most Midstream/MLPs, our methodology averages valuations derived from a DDM and EV/ EBITDA multiple.

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