Joe Biden had a neat nine-point plan for energy when he ran for president. He began implementing this plan on his first day in the White House with the cancellation of the infamous Keystone XL pipeline and has since continued his tough stance on fossil fuels.
The argument that this difficult attitude will in fact benefit oil producers has been presented since the campaign. It went like this: Biden’s fight for less oil and gas and more renewable energy will hurt U.S. oil and gas producers, but it will not diminish U.S. demand for oil and gas, and therefore it will benefit the industry, just not the American industry does not.
The argument makes sense, and there is a lot of evidence: after the Keystone XL was canceled, Alberta oil producers increased the amount of oil they sent by rail to U.S. refineries – a less safe way to transport crude oil. Biden’s moratorium on new oil and gas leases on federal land was one of the factors driving oil prices higher earlier this year. And the attitude of the Biden government towards Saudi Arabia may have contributed to the Kingdom’s decision to expand its voluntary oil production cuts, which contributed to the latest price increases.
The last point was recently made to Fox News by Stephen Schork, head of the Schork Group. Schork said Biden’s treatment of Saudi Arabia not only made it clear that oil and gas were no longer a priority for the government (except in negative terms).
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“On the closer side of what we saw, the biggest impact Biden had on prices was his treatment of Saudi Arabia,” Schork said. “There was [a] surprise two weeks ago when Saudi Arabia took a more hawkish stance during the OPEC meeting, and oil prices rose after the surprise decision. ”
But higher prices may be just the beginning of the US president’s problems with the oil and gas industry. In its energy plan, Biden’s team took note of the creation of millions of new jobs in clean energy and infrastructure. However, there is no word on the job that oil and gas could lose. Some of these jobs can certainly be transferred from the oil and gas industry to solar and wind, as we saw during the oil price crisis in 2014. The question of whether all jobs will be transferable remains open.
‘You do not hurt the big guys who do all the development. You’re hurting these little guys who dream out where no one else thinks there’s oil and gas, ‘a U.S. oil industry manager recently told the AP, commenting on President Biden’s crusade against the oil and gas industry. Related: Do Analysts Underestimate Demand for Chinese Oil?
This industry has indeed grown in new and unexpected ways thanks to the shale boom of the past few decades. Where independents were still scarce, the shale revolution led to an increase in oil and gas independents, and most of them, such as the family-run Kirkwood Oil & Gas land manager, are too small to deal with the government. fight.
According to the AP reports, there are also many in the industry who have prepared for the crusade. The report quotes a manager of Devon Energy as telling investors that Devon “will roll with the blows” and that he has built up 500 drilling permits. Devon is probably not the only one prepared.
And yet many small players will undergo. This will lead to a decrease in local oil production, especially if the permits start to run out. And that, of course, will lead to even higher oil prices – and gas prices at the pump – for U.S. consumers. Chances are high that this will happen before demand begins to decline permanently as motor vehicles and renewable energy generation become dominant over fossil fuel engines and power plants. It will be an unpleasant time for many, but no one says the energy transition will be easy or cheap.
By Irina Slave for Oilprice.com
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