One of the most pressing issues for
voters in the United States is the economy. It is important for the
future President to have a strong grasp on the various factors affecting
the U.S economy. However, Donald Trump's vague proposals regarding
the U.S. energy industry show just how inept he really is when it
comes to economics.
Coal vs. Natural Gas
Trump claims he wants to take measures
to increase coal production in the U.S. in order to rejuvenate the
ailing coal industry. However, he also proposes to boost the natural
gas industry at the same time in order to create more jobs within
that sector. This is all well and good, except the fact that it flies
in the face of any contemporary understanding of how energy markets
actually work.
Inverse Correlation
Demand in the coal and natural gas
markets is inversely correlated. This means that when demand for
natural gas goes up, demand for coal goes down. Natural gas and coal
act as replacements for one another in the energy markets. Most of
this has been caused by dramatic decreases in the price of natural
gas due to more efficient natural gas-fired combined-cycle
technology. Cheap prices for natural gas make it a more practical
choice for many energy producers to meet demand as opposed to using
coal. (2)
Fracking
Fracking causes an increase in natural
gas consumption by causing dramatic increases in supply of natural
gas. Any increase in production of natural gas, as Trump is proposing
to do, will result in increasingly lower natural gas prices making
coal comparatively even more expensive. More energy producers will
start switching from coal to natural gas, further draining the coal
industry of jobs. Therefore, it is impossible for Trump to actually
be able to do what he proposes, which is to increase both production
of natural gas and coal at the same time. (3)
Economists Find Trump's Energy
Proposals Implausible and Ignorant
Most economists
quickly discredited Trump's proposals for the energy industry. “He
[Trump] can't have it both ways – talk up expanding natural gas
supply when in North Dakota, and talk about bringing coal mining jobs
when in Kentucky!” said Robert N. Stavins, director of the
environmental economics program at Harvard. In other words, it is not
possible to promise more jobs in the natural gas sector while
simultaneously strengthening the coal industry. (1)
Clearly, Trump is
either ignorant of how global and energy markets work or he is
purposely misleading his followers, opting to consider politics over
economics when proposing economic policies. Whichever it is, this
shows he is obviously unfit to manage the world's largest economy.
Allowing him to do so could bring about extraordinary disaster to the
U.S. economy as well as the rest of the world.
Sources
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