Trump's energy job promise to clash with scant supply of labour

[WASHINGTON] President-elect Donald Trump promises that his sweeping changes to energy policy will create "many millions" of American jobs. Finding all those workers may be the challenge.

World markets are flush with coal and oil, keeping prices subdued and making it difficult for producers to profit from new investments.

At the same time, the US labour supply is thinning, meaning that adding millions of jobs in the energy industry alone is a tall order. The entire sector now employs 628,700 people in the US, about half of the peak in 1981, according to Labour Department records.

Mr Trump's unexpected electoral victory was in part built on his appeal to workers whose industries have suffered long-standing job losses, including coal workers in West Virginia, which registered more than twice as many votes for the billionaire businessman as for Democrat Hillary Clinton.

"I don't think we should look at mining to be an engine for job growth," said Thomas Costerg, senior US economist at Standard Chartered Bank in New York.

"You could see a pickup in employment. But on the scale of the US labour market, which is really huge, if you compare what's really driving job growth right now, which is mostly services," the sectors affected by energy policy changes are "quite marginal".

The planned energy reforms are slated to add US$147 billion in revenue to the US economy over 10 years, Trump economic advisers Peter Navarro, a business professor at the University of California at Irvine, and Wilbur Ross, a private equity investor, said in a Sept 29 report.

Assuming an average of US$15 billion a year, that would be the equivalent of less than 0.1 per cent of gross domestic product.

The Trump team cited two energy policies that have limited hiring: the Environmental Protection Agency's Clean Power Plan, which they charge has cut down on coal and natural-gas payrolls and lifted electricity rates, and the Interior Department's moratorium on coal mining permits, which put "tens of thousands" out of work.

"I will cancel job-killing restrictions on the production of American energy, including shale energy and clean coal, creating many millions of high-paying jobs," Mr Trump said in a video message about his first 100 days as president, posted to the Internet on Monday.

Mr Trump will have to contend with global forces beyond his control, Mr Costerg said.

"The biggest help, a bit paradoxically, would actually be commodity prices continuing to rally, and especially oil prices rallying further - that would be the strongest impetus for US production," Mr Costerg said.

In addition, "tension in the Middle East could lead to a sharp increase in oil prices."

Trump spokesman Bryan Lanza didn't immediately respond to a request for comment on Tuesday.

The president-elect has previously cited a 2015 report from the Institute for Energy Research, an oil industry-funded group, that says opening federal lands to oil, gas and coal leasing would add 552,000 jobs over seven years and 2.7 million jobs over 30 years, mostly indirectly in other industries outside of the extraction itself.

The energy industry has a relatively low labor intensity - producers work hard to get energy out of the ground or from other resources with as little effort as possible.

But every upstream production job is tied to a relatively high number of other positions. That multiplier effect is one reason the domestic oil and gas drilling boom in 2010 and 2011 helped drive an economic rebound in the US.

It's not clear that the US economy would respond the same way this time. Factors limiting further labour-market gains include a wave of baby boomers entering retirement without enough millennials to replace them, and a pool of unemployed Americans that's shrunk by about half to 7.8 million from a crisis-era high of in 2009.

Yet some 5.9 million employees are in part-time jobs but want full-time work, and almost half a million Americans are "discouraged workers" - unemployed who have looked for a job sometime in the past year but who have given up for lack of prospects.

Mr Trump can encourage more drilling by directing his agencies to begin years-long processes of rewriting mandates for oil and gas development on federal lands - and instructing regulators to move swiftly in selling territory and permitting new projects.

For coal, mining payrolls have fallen by more than two-thirds over 31 years - to 53,300 as of October - as cheaper natural gas and pollution restrictions encourage utilities to retire coal-fired power plants.

While Mr Trump can void policies that limit coal production, more available resources may be exactly the wrong prescription given the current supply glut.

Even before President Barack Obama's Interior Department paused new coal-lease sales in January, those transactions had slowed.

"Everything takes a while. Even if Day One, the Bureau of Land Management is open for business again - we're going to lease coal - it's not as if suddenly reversing the policy changes how companies behave," said Bloomberg Intelligence senior analyst Rob Barnett.

"There's not been strong commercial interest."

BLOOMBERG