Trump budget spares oil sector from deep cuts

President Donald Trump's proposed budget would cut billions of dollars from the energy sector's top regulators but spare federal programs that are important to oil and gas companies.

The fiscal 2020 budget, released today, would make deep cuts to non-defense government spending. It has already been declared dead on arrival in Congress. The US Interior Department and the US Environmental Protection Agency (EPA) would lose a combined $5.8bn, or 14pc and 31pc respectively, under the budget.

But the administration wants to increase spending on programs it sees as essential to its "energy dominance" agenda. The budget would boost spending on a plan to expand offshore oil and gas leasing from 2019-24, to begin oil and gas leasing in Alaska's Arctic National Wildlife Refuge, to open new areas to drilling in the National Petroleum Reserve in Alaska, and to expedite government processing of federal drilling permits.

"These efforts would provide industry with access to the energy resources America needs, while ensuring that taxpayers receive a fair return from the development of these public resources," the White House budget says.

Congress has swiftly rejected the last two budgets from the administration that also sought deep cuts to non-defense spending. The fiscal 2020 budget has an even lower odds of adoption now that the US House of Representatives is in control of Democrats, who oppose cutting funding on programs such as climate change, efficiency and advanced renewable energy technology.

The proposal comes as the annual budget deficit is projected to exceed $1 trillion this year, in part because of a Republican tax cuts enacted in 2017 and a bipartisan spending spree since Trump took office. The administration says the budget deficit is caused by too much spending, although the budget today proposes to boost military spending to $750bn from $716bn.

"It is not that Americans are taxed too little, it is that Washington spends too much," White House Office of Management and Budget acting director Russ Vought said in an opinion piece published today.

The administration has offered mixed support for renewable energy. Interior is seeking a total of $50mn for renewable energy development on onshore and offshore federal lands, an increase of $390,000 compared with existing levels, which comes after a record-breaking $405mn lease sale last year for offshore wind leases off Massachusetts last year.

The budget at the same time would cut other spending on renewables, efficiency and climate change. The US Energy Department is proposing to cut the Office of Energy Efficiency and Renewable Energy's $2.3bn budget to $343mn, although it would be supplemented with prior year balances of $353mn. EPA has proposed to eliminate $66mn worth of voluntarily climate initiatives, such as programs to reduce natural gas leaks.

The Trump administration is reiterating its request for Congress to create a $6.5bn fund for infrastructure upgrades and national parks that would be paid for with oil and gas royalties. The budget would redirect 50pc of the federal proceeds from oil and gas lease sales over the next four years into that fund, subject to an annual limit of $1.3bn.