Joe Biden had a neat, nine-point plan for energy when he campaigned for president. He began implementing this plan on the first day of the White House with the cancellation of the famous Keystone XL pipeline and has since continued his tough stance on fossil fuels.
The argument that this harsh attitude will benefit oil producers has been supported since the campaign. It went like this: Biden’s fight for less oil and gas and more renewable energy will affect American oil and gas producers, but it will not reduce US demand for oil and gas, so it will benefit the industry, not just the US industry.
The argument makes sense and there is a lot of evidence: after the cancellation of Keystone XL, Alberta oil producers increased the amount of oil they sent to US railroad refineries – a less safe method of transporting crude . Biden’s moratorium on new oil and gas leases on federal land was one of the factors driving up oil prices earlier this year. And the Biden administration’s attitude towards Saudi Arabia could have contributed to the Kingdom’s decision to extend the voluntary reductions in oil production that contributed to the recent price rally.
The last point was recently brought by Stephen Schork, the director of the Schork group at Fox News. Schork said that in addition to clarifying that oil and gas were no longer a priority for the government (except for negative terms), Biden’s treatment of Saudi Arabia had led to higher prices.
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“From what I’ve seen, the biggest impact that Biden has had on prices optimistically has been its treatment of Saudi Arabia,” Schork said. “Was [a] surprise two weeks ago, when Saudi Arabia had a weaker vision at the OPEC meeting, and oil prices rose after that surprise decision. ”
But higher prices could be just the beginning of the US president’s problems with the oil and gas industry. In its energy plan, Biden’s team noted the creation of millions of new jobs in clean energy and infrastructure. However, there is no word on jobs that could be lost in oil and gas. Some of these jobs are certainly transferable from the oil and gas industry to solar and wind energy, for example, as we saw during the 2014 oil price crisis. However, the question of whether all jobs will be transferable remains open.
“You don’t hurt the big boys who do all the development. You hurt these guys who dream where no one else thought there was oil and gas, “an oil industry executive recently told the AP, commenting on President Biden’s crusade against the oil and gas industry. Related to this: Do analysts underestimate China’s oil demand?
Indeed, this industry has grown in new and unexpected ways due to the shale boom of the last two decades. Where before there were few independents, the shale revolution has led to an increase in oil and gas independents, most of them, as a family-owned land administrator for Kirkwood Oil & Gas said, quoted above, too small to fight with the government.
Many in the industry have prepared for the crusade, however, the AP notes. The report quoted a Devon Energy executive as telling investors that Devon would “punch” and stockpile 500 drilling permits. Devon is unlikely to be the only one ready.
And yet, many small players will go under. This will lead to a decrease in local oil production, especially as permits begin to run out. And this will naturally lead to even higher oil prices – and pumped gas prices – for American consumers. This may happen before demand starts to fall steadily, as electric vehicles and renewable energy generation become dominant over fossil fuel cars and power plants. This will be an unpleasant time for many, but correctly, no one has said that the energy transition will be easy or cheap.
By Irina Slav for Oilprice.com
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