U.S. President Donald Trump gestures after signing executive orders during an indoor inauguration parade at Capital One Arena on Jan. 20, 2025 in Washington, DC.

President Trump swiftly initiated actions to reverse U.S. climate change efforts. His initial executive orders included starting the withdrawal from the Paris Agreement, accelerating fossil fuel project approvals, and declaring an energy emergency. These measures aimed to boost the U.S. fossil fuel industry, embodying a “drill baby, drill” approach.

“We will be a rich nation again,” he stated in his inaugural address. “And it is that liquid gold under our feet that will help to do it.”

However, transforming the energy system is far more complex. Trump’s push for increased fossil fuel production and “energy dominance” faces challenges from market forces. His actions will sometimes amplify existing market trends, while in other instances they’ll encounter inflexible market realities.

This doesn’t diminish the significance of Trump’s actions. White House pronouncements influence markets, but they are only one factor among many.

“The decisions U.S. companies make about oil production growth primarily depend on market signals,” explains Jason Bordoff of Columbia University’s Center on Global Energy Policy.

The oil sector exemplifies this dynamic. Oil’s global market dictates industry responses more than domestic policies. While the Biden administration wasn’t particularly supportive of the oil industry, U.S. oil production reached record highs during the Biden presidency due to the Ukraine conflict disrupting global trade.

Ultimately, oil prices and production profitability are the main determinants of industry decisions. Two-thirds of oil and gas executives surveyed by the Dallas Fed anticipated reduced drilling permitting times—a key concern under the Biden administration. Yet, a similar proportion planned no investment increases in 2025 beyond pre-election projections.

Oil prices are the most powerful lever for stimulating or reducing oil production. High prices typically encourage greater production; low prices trigger cutbacks. Recently, oil companies have prioritized maximizing profits from existing wells rather than significantly expanding drilling, even with high prices. Trump has limited control over oil prices, creating a complex scenario: higher prices might boost production (his goal), but also harm consumers through increased fuel costs.

The energy transition represents a long-term trend. While various oil demand scenarios exist, not all reserves are profitably exploitable. Many oil companies focus on maximizing existing well yields rather than exploring new drilling sites. Expanding drilling access might be ineffective if companies lack the incentive to drill. Congressionally mandated federal land drilling auctions under the Biden administration illustrate this point.

Meanwhile, renewable energy often offers the lowest electricity costs. Advances in clean technologies, from electric vehicles to battery storage, further enhance their appeal. “We didn’t go back to horses, even though there was a strong horse lobby when cars came,” notes Leah Seligmann of The B Team.

Other trends favor Trump. Increased power demand, largely from AI data centers, strains the U.S. electricity grid. While much of this demand will be met by cheaper clean energy, this pressure also fuels natural gas infrastructure expansion plans. U.S. utilities have planned 17.5 GW of new natural gas capacity (over eight Hoover Dams’ worth), according to Rystad Energy. Trump can facilitate this, particularly through permitting, but he’s not the driving force.

Trump’s inability to control market trends doesn’t negate his climate actions’ impact. For the oil and gas industry, his executive orders may mean less regulation and higher profit margins. Many also appreciate his industry support.

Even if Trump cannot halt the energy transition, his actions will have negative climate consequences. His presidency will likely impede many Biden-era climate initiatives. The future of Inflation Reduction Act climate programs remains uncertain. A pro-fossil fuel government will benefit the oil and gas industry through federal policy decisions on trade and permitting.

His executive orders, especially the Paris Agreement withdrawal, signal a diminished U.S. climate leadership role globally. However, this wasn’t solely a consequence of his executive orders; it stemmed from his election.