The future world of Donald Trump's top energy adviser hasnatural gas, coal and renewables fighting it out in a free market, unencumberedby federal regulations that add costs and tilt the market toward"preferred" fuels.
Trump energy adviser and
North Dakota Republican Congressman Kevin Cramer is willingto allow natural gas to kill coal in the market, despite his candidate's pledgeto bring back hundreds of West Virginia coal mining jobs eliminated by cheapshale gas by reducing regulations on coal production and power plants.
"If we have a wide open free market and the price ofcoal can't compete with the price of natural gas and that's what drives coalout of business, well, there's not a lot you can do about that," Cramertold S&P GlobalMarket Intelligence reporters in a phone interview July 15.
Cramer said that while he helped write inBismarck, N.D., and has been advising the candidate on his energy positions,his influence is limited. Trump's pledges to bring back Appalachian coal jobsare made in the moment as he throws "red meat" to the room, Cramersaid.
"A lot of what I wrote for him was a lot of theregulatory stuff, rolling back the regulation, the fact that the industries arebeing killed or bled to death by nicks," Cramer said. "I also focuseda lot on technology control, tax policy and what not, that allows innovators torise to the top. He took a little more red-meat approach to it. But everythinghe said, I thought was fantastic, so I didn't have any trouble with it."
Like many former utility rate makers — Cramer served on theNorth Dakota Public Service Commission before winning election to the state'sonly congressional seat — Cramer is suspicious that natural gas is just onewinter away from a checkered past of $2/MMBtu per day price moves. Becauseclimate change is not a factor in Cramer or Trump's vision of the future,Cramer thinks coal is the best long-term choice for cheap and stable energy forpower.
"Coal is a very stable commodity," Cramer said."Utilities have 20-year contracts with coal companies. You don't get20-year contracts with natural gas companies."
Regulations "are expediting the death of coal. If thedeath of coal is or isn't happening as the result of natural market forces, sobe it. So how do you square the promise to restore coal jobs? And have wecrossed the precipice? I don't know that we have."
Loosening federal regulations holds out the possibility ofreigniting coal demand, Cramer said, by allowing the restart of older coalplants. "Utilities will always look for the lowest input costs. If therewas a way to un-mothball or start up some of these coal plants that utilizelocal coal and clean coal technologies, technologies that will never bedeveloped if we kill the industry with regulation, I think there's still a strongcase to be made for good, low-cost baseload electricity," he said.
Cramer also said Trump's plan to build a wall between Mexicoand the U.S. will not interfere with natural gas exports to Mexico, a growingdemand market. "[The] diplomacy of building a wall while at the same timeexporting natural gas is a sensitive one," Cramer said. "Remember,Mr. Trump is always hoping for, thinking of a position for negotiation. Now thewall, that's pretty much a hallmark of his candidacy. So I don't see himabandoning that at all. But at the same time, everything becomes a negotiatingissue and there's nothing in a wall that precludes us from trading with Mexico."
Similarly, there is nothing in Trump's plans to renegotiateglobal trade deals that would inhibit exports of U.S. LNG, Cramer said.
"When you talk to him about [trade], whether it'sbilateral deals or more focused trade deals, there's nothing in his tradepositions that preclude us from exporting anything," Cramer said."It's just that he wants to negotiate better deals. And part ofnegotiating better deals, in his mind, and more and more, in mine, as I look atall 7,000 pages of [the Trans-Pacific Partnership], is to have more bilateraldeals."