Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Ideas

Trump’s Budget Would Be a Bust for Oil Boomtowns

And coal communities and fracking villages and all the rest.

•
The Capitol as a wrecking ball.
Heatmap Illustration/Getty Images

Amid last month’s headlines about departures from the Department of Energy, the exits of Brian Anderson and Briggs White received little attention. Yet their departures foreshadowed something larger: the quiet dismantling of federal support for the economic diversification of fossil fuel–dependent regions of the country.

Anderson and White led the Energy Communities Interagency Working Group, created by a 2021 executive order to coordinate the federal strategy to support coal–reliant regions through a global transition to cleaner energy. This Biden-era strategy recognized that communities where employment opportunities and tax bases depend on fossil fuels face serious risks — local levels of prosperity generally rise and fall with production levels — and they require support to build new engines of economic activity.

In contrast, President Donald Trump’s prescription for fossil fuel communities is to produce more fossil fuels. In addition to cutting clean energy incentives, the budget reconciliation bill passed by the House of Representatives last week seeks to directly support fossil fuel production by accelerating leasing and permitting, lowering royalty rates, and repealing the methane emissions fee.

History suggests that Trump’s ability to help fossil fuel communities by boosting production is limited — similar efforts in Trump’s first term failed to significantly alter the trajectory of coal, oil, or natural gas output. But the funding cuts codified in the current reconciliation bill could do real harm by dismantling federal programs that support economic diversification. Communities that depend on fossil fuel industries will be vulnerable to severe economic shocks when demand for their products eventually declines.

The canary in the coal mine closures

The need to help transitioning regions isn’t new, but federal support for struggling communities has long been stigmatized. In 1980, a federal commission urged policymakers to focus less on struggling places and more on helping individuals move to where opportunity existed. President Ronald Reagan used this report to justify cutting federal economic development programs, including proposing to eliminate the Appalachian Regional Commission. Congress did not fully abolish the ARC, but its budget was slashed nearly in half, leading to staff reductions and the phasing out of the programs designed to bolster the economy of the persistently struggling region.

In the decades that followed, manufacturing towns were largely left to fend for themselves as globalization accelerated. A study by MIT’s David Autor and colleagues showed that 86% of the manufacturing job losses from trade shocks in the early 2000s were still reflected in depressed local employment rates in 2019. Most workers didn’t find new jobs or migrate.

If the loss of dominant employers causes “miniature Great Depressions” in local economies across the country, then a rapid decline in fossil fuels spells acute risks for communities that depend on these industries for jobs and public revenues. We see this happening already in coal-reliant regions. In Boone County, West Virginia, coal production declined by over 80% from 2009 to 2019, causing the county’s gross domestic product to decline by over 60%. Three of Boone’s 10 elementary schools were forced to close.

President Trump entered office in 2017 pledging to “bring the coal industry back 100%” with a deregulatory strategy much like the one his administration is pursuing today. But during his first four-year term, domestic coal mining employment fell by 26%, and coal-fired power plant capacity declined by 13%, demonstrating the futility of doubling down on an economic model when macroeconomic forces are working against it.

The beginnings of a plan

These outcomes are not inevitable. Four-hundred miles west of Boone, the far more economically diverse Hopkins County, Kentucky was able to weather its own 75% decline in coal production without a comparable economic crash. In Germany’s Ruhr Valley, the German government paired a coal phase-out with over €100 billion in long-term investments — new universities, industrial incentives, environmental restoration, and worker retraining. While some towns in the region are still struggling, the Ruhr Valley’s shift from a coal powerhouse to a more diverse, knowledge-based economy shows that fossil fuel regions can reinvent themselves.

Recent policies in the U.S. began to take similar steps. As part of a broader federal place-based economic strategy, the American Rescue Plan dedicated hundreds of millions to rebuilding coal communities in 2021. Then came the Infrastructure Investment and Jobs Act, which included billions for cleaning up abandoned mines and orphaned oil wells and funding large-scale demonstration projects for carbon capture and hydrogen production. The Inflation Reduction Act added bonus tax credits and carve-outs to grant programs that target fossil fuel communities.

The now-defunct Energy Communities Interagency Working Group helped knit these efforts together. It served as a clearinghouse for funding opportunities, published “how-to” guides for local leaders, and deployed “rapid response teams” to coal regions.

To be sure, the strategy had limitations. Most programs focused narrowly on coal regions and clean energy solutions, and the IWG had minimal funding for its coordinating efforts. But the strategy shift marked real progress and has generated promising early signs, such as an iron air battery manufacturing facility at an old steel mill in Weirton, West Virginia, carbon capture projects in North Dakota and Texas, and “hydrogen hubs” in the Gulf Coast and Appalachia.

Reversing course

Under the Trump administration, that progress is at risk. Government efficiency initiatives have already led to the gutting of federal programs best positioned to support investments in fossil fuel communities, including the Loan Programs Office, the Office of Clean Energy Demonstrations. and the Federal Thriving Communities Network Initiative.

Trump’s budget proposes severe cuts to the federal support for regional economic development, including eliminating the Economic Development Administration, the federal agency dedicated to helping communities strengthen their local economies.

The reconciliation bill passed by the House of Representatives is a step toward codifying those cuts — with reductions in non-defense discretionary annual spending of $163 billion (over 20%) — and it would also eliminate most of the tax credits and grant programs that encourage investments in energy infrastructure projects in fossil fuel communities. Certain policies that are especially well suited for fossil fuel communities, like incentives for enhanced geothermal energy, may be phased out before ever really getting off the ground.

Rolling back support for fossil fuel communities will curb these regions’ opportunities to build new engines of economic prosperity. Without credible, lasting commitments from the federal government, many fossil fuel communities have little choice but to stick to the economic model they know best, despite their vulnerability to the eventual end of fossil fuels.

🔒

You’ve reached your free article limit

Subscribe to Heatmap News for unlimited access to daily energy and climate coverage.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
AM Briefing

Total Eclipse of the Heart

On Korea’s Westinghouse wishes, a lithium deal, and British heat pumps

Solar panels.
Heatmap Illustration/Getty Images

Current conditions: New York City’s temperature is set to rise as high as 80 degrees Fahrenheit this week before plunging as the coldest weather so far this season blows into the Northeast • Temperatures in Denver have been above 80 degrees for the past 11 days straight • Nearly 200,000 households, mostly in Florida, are still without electricity after Hurricane Isaias.


THE TOP FIVE

1. Oil prices spike as attacks on Saudi Arabia overshadow Russian diesel deal

In theory, news of President Donald Trump’s deal with Russia to pump millions of tons of diesel into the global market should have eased oil prices. Instead, all three major crude benchmarks spiked Monday by nearly 1.5%. Only West Texas Intermediate, the U.S. metric that has largely evaded the worst knock-on effects of conflict in the Middle East, remained below $100 per barrel. The hike came as the Houthi attacks on Saudi Arabia over the weekend weighed heavily on investors’ minds, eclipsing whatever impact the diesel deal could have had.

Keep reading...Show less
Blue
Daily Briefing

The Wrong Kind of Abundance?

What 700 math problems say about the AI economy’s biggest open question

Sam Altman.
Heatmap Illustration/Getty Images

This is Heatmap Daily, an evening news digest written by our executive editor. Subscribe here.

Happy Monday and welcome back.

Keep reading...Show less
Blue
Climate

How the Godzilla El Niño Will Drench California

This past weekend’s storms caused flooding and property damage up and down the coast — and it’s going to get worse.

Godzilla holding California.
Heatmap Illustration/Getty Images

California has around 3,400 miles of shoreline, ranging from the wild, foggy beaches of the North Coast to the sunbather-studded sands of Orange and San Diego counties. That’s a whole lot of border to share with the Pacific Ocean, especially when the water is as hot and tempestuous a neighbor as it is right now.

Just ask the city of Long Beach, which this weekend was on the receiving end of some Super El Niño mischief. Swells from the storm briefly dubbed Hurricane Rachel “annihilated” beachfront mansions and flooded city streets, causing pieces of the local boardwalk to “shred away.” “It’s never happened like this before,” one resident of 64 years told the New York Post.

Keep reading...Show less
Green