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How Trump's energy order affects jobs, fuel prices

President Donald Trump makes remarks prior to signing an Energy Independence Executive Order at the Environmental Protection Agency (EPA) Headquarters on March 28, 2017 in Washington, DC.
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President Donald Trump makes remarks prior to signing an Energy Independence Executive Order at the Environmental Protection Agency (EPA) Headquarters on March 28, 2017 in Washington, DC.

President Trump's executive order rolling back energy regulations is unlikely to spawn a surge of jobs or a quick reduction of fuel prices, as the basic rules of economics maintain a powerful hold on the industry.

Will coal jobs suddenly come roaring back? Don't bet on it. Will the price of electricity go into reverse? Not likely. Will increased federal land rights for oil and natural gas clear the way for more U.S. energy production? Yes, eventually. And fewer regulations for oil and natural gas could contribute to lower energy prices in the long run. Plus, lower fuel economy standards, which the Trump administration is contemplating as part of a separate review, could bolster gasoline demand.

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Still, the biggest factors shaping the American energy industry are market forces — and that's not changing anytime soon.

Here's how Trump's executive order could affect:

Coal jobs:

Trump has promised to restore the coal industry, but that's a dubious promise for a very simple reason: Natural gas is cheaper, cleaner and more readily available.

Coal accounted for about half of American electricity a decade ago, but that fell to 29% in 2016, according to the Energy Information Administration. The number of U.S. coal mine jobs was 65,971 in 2015, down from 91,611 in 2011.

Former President Obama's Clean Power Plan in 2015 curbed emissions at power plants, aiming to combat climate change. Trump wants to roll back the plan, which had slashed allowable carbon pollution.

"It may have the impact of avoiding further job losses than it does bringing back plants that are closed," said Stewart Glickman, energy analyst at market research firm CFRA Research, in an interview.

But the substantial increase of available natural gas amid the U.S. shale boom has undermined coal's viability as a fuel source for utilities. Advances in energy extraction through new hydraulic fracturing techniques have increased supplies of oil and natural gas, and those gains aren't receding.

"Natural gas as a competitive threat to coal isn't going away simply because we're gonna lift regulations on coal," Glickman said. "And, ironically, to the degree that the Trump administration is able to put in place other changes that lift restrictions on drilling for crude oil and natural gas, all you're doing is making gas that much cheaper for utilities to purchase."

"The decrease in coal by the electricity sector is because of economic reasons, as it has been outcompeted by low-cost natural gas," Greg Gershuny, of the Aspen Institute's Energy and Environment Program, said in a report Tuesday.

Oil and gas jobs:

The prospect of additional drilling on federal land could be a boon to oil and gas jobs, which have suffered over the last two years as the price of oil plummeted below $26 per barrel in early 2016. The U.S. mining, quarrying, oil and gas extraction sector had an estimated 628,800 jobs in February, up from a 10-year low of 608,600 in October, but down from a high of 851,800 in September 2014.

But additional drilling remains a small factor in the short term. That's because oil producers want to avoid committing to new leases while crude prices remain low. Few analysts expect a major surge in prices in the next few years. Oil is trading around $50 per barrel.

One big factor is the Organization of the Petroleum Exporting Countries, which reached an agreement in late 2016 to slash oil production in a bid to bolster prices. It worked for a few months, but skepticism about the durability of the accord has bubbled to the surface in recent weeks.

OPEC countries are unlikely to cede market share to the U.S. for long, said Mark Watkins, an investment manager who monitors oil for U.S. Bank's Private Client Group.

Meanwhile, sluggish economic growth around the world remains perhaps the greatest impediment to the U.S. energy industry. If it continues, the industry's output could remain below its potential.

"Opening up more leases isn't an immediate benefit because we've got to get more demand," Watkins said.

Pump prices:

There won't be any immediate impact on gasoline or heating oil prices, which are determined primarily by market forces.

U.S. oil and natural gas producers have increased production in recent years, which has contributed to gasoline's slide. Gas prices have fallen from nearly $3.90 per gallon nationwide in September 2012 to about $2.29 on Tuesday, according to GasBuddy.

Gasoline is unlikely to make a sudden surge because U.S. oil production is picking up. U.S. producers have added 336 oil rigs since the industry's low point on May 27, according to Goldman Sachs.

Wind and Solar:

Renewable energy sources such as wind and solar, which have long been more expensive than fossil fuels, have gained considerable ground in recent years, according to a recent report by investment firm Lazard.

That makes solar panels, for example, a viable option for certain consumers. The average system costs $15,000 to $21,000 but often pays off in energy savings after five to 10 years, according to Consumer Reports.

Aspen's Gershuny said the rise of renewables will hasten coal's demise.

"This policy won't work," he said. "It is a mistake for the Trump administration to think it can reverse the demise of coal. Even the coal industry knows this."

A report released Tuesday by the Solar Foundation concluded that jobs connected to the solar energy increased 25% to 260,077 in 2016.

"While (Tuesday's) order is not a step in the right direction, it will not halt the solar industry's progress," Solar Foundation President Andrea Luecke said in an email.

Ken Markowitz, a Washington-based senior clean energy and environmental consultant at law firm Akin Gump, said companies aren't necessarily going to withdraw from alternative energy plans because of a regulatory shift.

And many states are expected to challenge aspects of the Trump plan, setting the state for a "legal mess."

"Following through on a campaign promise will get splash and could over time be disruptive," Markowitz said in an intervew. But "the programs are hard to dismantle."