A year ago, the American electorate commenced a process that returned Donald Trump to the White House. One does not have to be a diehard supporter of the MAGA movement or a hair-pulling, frustrated critic to accept that few, if any, heads of state have had such a convulsive impact on the international order in their first year of office. The question is whether this impact is temporary and transitional or enduring and structural.In the context of energy, there are four structural developments that, whilst not initiated by Trump, have been influenced by his transactional style of government.AdvertisementThe first relates to critical minerals. These have been traded for decades without commentary. It is only since Trump “weaponised” tariffs and China (which has a stranglehold on these commodities) retaliated by imposing restrictions on exports that these commodities have acquired strategic significance. Efforts have now commenced to jumpstart the location and mining of indigenous resources. But given that the average lead time for bringing a new mine into the market is 15 years, the likelihood of countries reducing their dependence on China in the near future is slim. The policy option of decoupling from China is, therefore, not practical. Unless, of course, the intent is to give up on the nationally determined target date of net zero carbon emissions agreed at the Paris COP summit.An ironic aside, which I picked up from an article by Rana Foroohar in the Financial Times, is that America was once the dominant manufacturer of these minerals. The government was not persuaded of the strategic significance of these minerals and authorised the sale of the US corporate Magnequench, the leading manufacturer of rare earth magnets, to Chinese investors. China’s paramount leader, Deng Xiaoping, was convinced that rare earths were potentially as valuable as oil and supported the purchase with tax incentives and cheap loans. America also once had the largest rare earths mine in the world, the Mountain Pass mine in California. It closed down in 2012 because of a lack of governmental support. Now, President Trump is promising massive financial support to investors in this sector.The second relates to the electricity demand of hyperscalers (Meta, Google, Microsoft, and Amazon) and their data centres. The IEA has estimated this demand will triple over the next 10 years, from 400 TWH to 1,200 TWH. The question is how this demand will be met. These companies have committed to not broadening their carbon footprint. I cannot see how they will manage that. Billions will have to be invested to create and integrate the required renewable energy system. Most likely, the companies will supplement the investments of the public utilities with onsite captive generation, possibly through even small scale, modular nuclear reactors. Perhaps they will turn to a hybrid model combining gas-based power generation with renewables and offset the increased carbon emissions through green investments. Perhaps the demand will not be so high because of innovation and efficiency.AdvertisementSeveral trends are clear. One, these data centres will change the configuration of energy demand, supply, pricing, trade, and investment. Two, they will acquire the status of strategic assets. Governments will scramble to house these centres. The video of a White House dinner during which President Trump wrests billion-dollar commitments from each of the CEOs sitting around the table is indicative. And three, capital will flow towards countries that have a competitive edge in green energy, widening the gap between “energy-rich digital exporters” and “energy-poor importers”.The third change flows from the first two. The energy regulatory landscape has got more complex and fragmented. Recently, the US Department of Commerce expanded the conditions for blacklisting a company. Their purpose was to restrict trade with China. China responded by bringing under its jurisdiction all goods that contained even a trace of inputs produced in China. The EU has imposed Carbon Border Adjustment tariffs. More cumbersome are the raft of energy-related regulations of its member nations. The reality is that energy trade and investors now face multiple layers of regulation across multiple jurisdictions. Specialised knowledge is required to manage this complexity. Governments and companies would do well to secure these skills. Else, they will face delays, uncertainties, and higher costs.most readFinally, there is a change in the balance of power in the petroleum sector. The proximate cause of this change is the physical degradation of the production capacity and petroleum infrastructure of Iran, Russia, and Venezuela — because of Israeli bombs, Ukrainian drones, and US sanctions. The likelihood of these countries regaining their erstwhile influence even after Eastern Europe returns to normalcy, conditions in the Middle East stabilise, and sanctions are lifted is slim. This is because it will take decades to repair the damage and perhaps, more importantly, they may not have the capital, technology, or skilled labour to locate and develop new reservoirs.On the flip side, Saudi Arabia and the smaller Gulf kingdoms have gained market share and geopolitical influence. They are the only producers with spare capacity — analysts estimate that Saudi Arabia will “account” for 70 per cent of the 1.65 mbd unwound last September — and, as Fareed Zakaria has pointed out, given the role these countries played in bringing Israel and Hamas to the negotiating table, they have established their indispensability to all future “conflict negotiations” in the Middle East. I have wondered whether Trump’s decision to sanction the two oil companies, Rosneft and Lukoil, was driven not by his desire to tighten the screws on Russian President Vladimir Putin but to redeem a debt of gratitude to these petrostates for helping him notch a credit to his Nobel Peace Prize balance sheet. For by taking out 2-3 mbd of oil from the market — the quantum exported by these two companies — he was preventing the collapse of oil prices. This may be far-fetched, but what is not is that this altered configuration of power will be the pivot around which petroleum trade, contracts, and prices will revolve in the future.The writer is chairman, Centre for Social and Economic Progress