Joe Biden had a nine-point, orderly energy plan when he campaigned for the president. He began implementing this plan on his first day at 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 tough stance will benefit, in fact, oil producers has been made since the campaign. It was like this: Biden’s fight for less oil and gas and more renewable energy will hurt U.S. oil and gas producers, but it won’t reduce U.S. demand for oil and gas, so it will benefit the industry, not just American industry.
The argument makes sense and there is a lot of evidence: after canceling the Keystone XL, Alberta oil producers increased the amount of oil they sent to U.S. railroad refineries, by the way, one less method. safe to transport 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 it is possible that the Biden administration’s attitude towards Saudi Arabia has contributed to the Kingdom’s decision to extend the voluntary cuts in oil production that contributed to the latest price hike.
This last point was recently made by the director of Schork Group, Stephen Schork, on Fox News. Schork said that in addition to making it clear that oil and gas were no longer a priority for the government (except in negative terms), Biden’s treatment in Saudi Arabia had led to higher prices.
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“On the front closest to what we’ve seen, the biggest impact Biden has had on bullish prices has been his dealings with Saudi Arabia,” Schork said. “There was [a] surprise two weeks ago when Saudi Arabia had a more blatant view at the OPEC meeting and oil prices rose after that surprise decision. ”
But higher prices may be just the beginning of the U.S. president’s problems with the oil and gas industry. In its energy plan, the Biden team noted the creation of millions of new jobs in clean energy and infrastructure. However, there is not a word about jobs that can end up being lost in oil and gas. Some of these jobs are undoubtedly transferable from the oil and gas industry to solar and wind energy, for example, as we saw during the 2014 oil price crisis. open the question of whether all jobs will be transferable.
“You will not be hurting the big ones who are doing all the development. You’re hurting those little ones who dream where no one thought there was oil and gas, ”a U.S. oil industry executive recently told the AP commenting on President Biden’s crusade against the oil and gas industry. Related: Do analysts underestimate Chinese oil demand?
In fact, this industry grew in new and unexpected ways thanks to the shale boom of recent decades. Where previously independent ones were scarce, the shale revolution led to an increase in oil and gas independents, most, as the family-owned Kirkwood Oil & Gas land manager said, quoted above. too small to fight the government.
However, many industry reports were prepared for the crusade. The report quoted a Devon Energy executive as telling investors that Devon would “roll with the blows” and that it had stored 500 drilling permits. Devon is unlikely to be the only one prepared.
And yet, many small players will go under. This will lead to a decrease in local oil production, especially when permits start to run out. And, of course, this will lead to even higher oil prices – and pumped gas prices – for American consumers. This is likely to happen before demand begins to decline permanently, as electric vehicles and renewable energy generation become dominant over cars and fossil fuel power plants. This will be an unpleasant time for many, but in all fairness, no one said the energy transition was easy or cheap.
By Irina Slav for Oilprice.com
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