President-elect Joe Biden has pledged to pursue “aggressive emissions reductions,” focusing on a greener agenda that aims to reduce fossil fuel dependence and fight climate change.
Industry experts have warned that reducing support for America’s fossil fuels could threaten its security by reducing its energy independence.
U.S. oil and natural gas producers employed around 1 million American workers in 2019, though jobs in the industry have been hit hard by the coronavirus pandemic.
Oil prices could rise to mid-$50s to $60s in 2021 if economies open up, U.S. energy secretary says
American shale producers are likely being kept up at night over what could be in store for their industry over the next four years, if pledges made by some lawmakers in Congress and President-elect Joe Biden are anything to go by.
U.S. Energy Secretary Dan Brouillette seems to think so. Asked by CNBC’s Hadley Gamble whether shale producers, whose drilling boom catapulted America to the position of the world’s largest oil producer in 2018, should be worried about the incoming administration, Brouillette replied, “Of course.”
“I think they should be, frankly, because there are some in Congress who are going to drive a climate policy that’s going to be very aggressive. So there may be some concern on the part of those folks, I know the ESG (Environmental, Social, and Corporate Governance) movement is very strong.”
“The investment money may become a bit more difficult to get,” he added. “Those are all policies where we’ll have to wait and see what happens with this new Congress.”
A derrick man secures a length of drill pipe during drilling on a natural gas drill rig near Montrose, Pennsylvania, U.S., on Monday, April 5, 2010.
The ESG movement has picked up pace in recent years, with some major investors — notably BlackRock, the largest asset manager in the world — “making sustainability integral to portfolio construction,” according to its CEO Larry Fink. Fink wrote this year that “climate risk is investment risk,” and that it’s brought the world to “the edge of a fundamental reshaping of finance.”
But climate action on a federal government level may be what scares shale producers the most. Biden has pledged to pursue “aggressive emissions reductions,” focusing on a greener agenda that aims to reduce fossil fuel dependence in the fight against climate change, which climate scientists almost universally agree is a grave threat to the planet.
A 2018 report by scientists in President Donald Trump’s own administration warned that climate change will cost the U.S. hundreds of billions of dollars yearly and harm human health. Trump, who has consistently supported the fossil fuel industry in favor of American energy independence, replied by saying, “I don’t believe it.”
How anti-fossil fuels is Biden?
The Democratic former vice president doesn’t plan to outright ban fracking, the fossil fuel extraction process by which shale gas is produced, or oil and natural gas production generally, which employed nearly 1 million American workers in 2019, according to official U.S. figures.
He just aims to significantly curb it with regulation, many analysts say.
Biden has pledged to protect national parklands and wildlife refuges, where Trump allowed or tried to allow drilling to take place, and says he will be “banning new oil and gas leasing on public lands and waters,” according to his campaign website. He also promised to enact punishments for major corporate polluters, proposing fines and even jail time, and warned that he’d force “polluters to bear the full cost of the carbon pollution they are emitting.”
It’s a very uncertain picture in the oil market, says IEA
And when asked about his approach to the industry in a pre-election presidential debate with Trump, Biden said, “I would transition away from the oil industry, yes. The oil industry pollutes significantly. It has to be replaced by renewable energy over time.” He later backtracked somewhat, telling reporters, “We’re not getting rid of fossil fuels. We’re getting rid of the subsidies for fossil fuels, but we’re not getting rid of fossil fuels for a long time.”
Democrats may be hamstrung
So Biden’s presidency won’t necessarily be a death blow to the industry. It’s important to note that the Democrats, who champion a climate-centric energy agenda, hold a very thin majority in the House of Representatives and may end up being in the minority in the Senate, depending on the result of the Georgia runoff election on January 5. That would effectively block them from passing any legislation that could negatively impact the oil and gas industry.
Oil markets are anticipating a post-pandemic demand recovery: IHS Markit
Industry experts have warned that reducing support for America’s fossil fuels could threaten its security by reducing its energy independence — a term that itself is debated, as the U.S. still imports significant volumes of oil from other countries, including Saudi Arabia, though those levels have dropped dramatically in the last two decades.
Asked whether that increased independence will be put at risk over the next four years, Brouillette replied, “I think every change in administration, should there be one, is going to require the American people to evaluate what the new policies are. But I don’t know that the American people are going to ever take a step backward from this independence that’s been established over the last three and a half to four years.”
