According to the economic model of the United States Environmental Protection Agency (EPA), President Donald Trump's plan to roll back methane emission regulations is not expected to have a significant impact on reducing oil and natural gas prices.
Trump and Commissioner Lee Zeldin, identified as EPA, announced this proposal on Tuesday in Lubbock, Texas, with the aim of reducing regulatory costs and supporting domestic energy production.
Zeldin stated in the EPA declaration: 'When owners and operators are able to produce, the United States will benefit from lower prices.'
EPA It is expected that these changes will cause the price of US crude oil to drop by 11 cents per barrel in 2027, a decrease of 0.14%; at the same time, it will increase domestic oil production by 0.09%. According to the calculations of CNBC, this is approximately equivalent to the United States producing about 1 additional barrel of oil for every 1,000 barrels produced originally.
CLSA Energy Research Analyst Baden Moore stated that the uncertainties in the implementation process, as well as whether the policy can be sustained across different governments, may limit producers' investment decisions.
He stated to CNBC that this "limits the room for current production to increase in the short term," including for the year 2027.
Moore added that these changes could also help to slow down the decline in current production by allowing some oil wells to continue operating in situations where it would no longer be economical due to environmental compliance costs.
Moore expects that this policy will only affect a very small portion of the US shale oil market.
Since CLSA expects oil prices to remain above $80 per barrel, many oil wells that are already commercially viable will be able to continue operating. Therefore, the number of oil wells that depend on relaxed regulations to continue operating will be limited.
This proposal may help many oil well operators, but its impact on the overall supply is limited.
The International Energy Agency states that marginal oil wells, which are those with lower oil and gas production, account for about 80% of the active oil wells in the United States, but their production accounts for less than 10%.
EPA Proposal to Roll Back
EPA is considering applying more lenient methane requirements based on the oil well production levels, or whether the well uses conventional or unconventional extraction methods.
The institution will also cancel the "Super Emitters Program," which relies on approved third-party monitoring agencies to identify significant methane leaks. Another approach is that operators can burn off the natural gas associated with oil through flaring, a process that can destroy 95% of the methane.
EPA It is estimated that this proposal will result in an additional 60 million tons of methane emissions between 2027 and 2050.
The institution told CNBC that these changes are estimated to save the U.S. economy about $45 billion during this period, of which approximately $42 billion comes from lower compliance costs.
EPA also estimates that operators will capture less natural gas for sale or use, resulting in a loss of approximately $4.2 billion in revenue. This figure has been included in their estimate of $42 billion in compliance savings.
Before any changes are finally finalized, this proposal still needs to go through the rule-making process, which includes a public comment period and further review by EPA.
At the time of this measure, the Trump administration was also relaxing sanctions on Russian diesel exports as part of efforts to address fuel prices. Energy Secretary Chris Wright told CNBC on Tuesday that whether more shipments would be allowed depended on Moscow's actions.
