This analysis explores the effects of the Trump administration on regulations, trade and other policies affecting the energy sector. As domestic and international energy landscapes shift, this e-book examines the emerging opportunities and challenges.
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Recent market discussions have focused on the evolving energy industry, driven by changes introduced by the new U.S. administration. These changes have raised numerous questions about the impacts of industrial and geopolitical policies on domestic and foreign economies. This e-book provides an update on observed market trends and contemplates future energy market dynamics in these uncertain times.
The industry mentality is shifting from “drill, baby, drill” to “build, baby, build,” creating opportunities for a broad array of energy technologies and systems, including both oil and gas and power. Lower regulatory burdens promote pipeline infrastructure and transmission line expansions and provide support to baseload power types like gas-fired generation, geothermal and nuclear.
The current administration’s industrial and geopolitical policy aims to incentivize domestic manufacturing, boosting energy demand and addressing security concerns. Additionally, there is a strong emphasis on AI leadership and data center development. Despite these positive shifts, the situation is not perfect.
However, there are technologies encountering headwinds due to recent political and policy shifts. Carbon capture, utilization and storage (CCUS), which involves capturing CO₂ from various sources for use in materials or underground storage, faces challenges alongside hydrogen projects, primarily due to rescinded or uncertain grants and funding. While these technologies still receive support from tax credits, there is now increased market hesitancy and caution.
Global oil demand is tempering, as shown by the year-over-year demand growth analysis. Before COVID-19, incremental annual demand trended around 1-1.5 million barrels per day, but there was a spike post-COVID to make up for the initial shortfall. We expect 2025 demand to drop below the historical range, influenced by economic uncertainties such as weak growth in China, altered trade policies and lower GDP forecasts from sources like the Atlanta Fed.
Additionally, OPEC is signaling the return of more barrels to the market, shifting from their previous role of controlling supply to support prices. This faster reintroduction contributes to market softness into 2026 and creates a weaker price environment compared to recent years.
The natural gas market outlook contrasts the oil market story, displaying a shift from historically weak prices to stronger forward-looking fundamentals. The right-hand chart in Figure 4 displays how natural gas prices are expected to hover around $3.50/MMBtu or higher for the remainder of the decade, compared to the $3/MMBtu ceiling seen over most of the previous decade.
Several factors are driving this price increase. Liquefied natural gas (LNG) exports from the U.S. and Canada are expected to boost gas demand; the left-hand chart highlights the capacities of various LNG projects coming online. Additionally, weaker oil prices mean less associated gas entering the market, thereby tightening supply. Another key factor is the continued robust demand for natural gas in power generation, even with the growing adoption of renewable energy sources.
Overall, natural gas is seen as a bright spot in the energy market with a promising price outlook through the end of the decade.
After 10-15 years of relatively flat power demand in the U.S., there has been a noticeable inflection in recent years, driven by evolving consumption patterns and the increasing influence of data centers. The right-hand chart showcases capacity projections from major data center developers such as Meta, Google, Amazon and Microsoft. These companies are rapidly expanding their capacity to meet the requirements of AI and high-intensity computing.
The growth of data centers has significant implications for power service providers as large developers seek energy solutions to manage their extensive power needs. There is a notable shift from a supply-side focus to placing more emphasis on demand-side services.
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