The USA Presidential elections this month have retained the attention of all business leaders worldwide. Now the result is known, declaring Joe Biden the next president of the United States of America. Then, what are the US election impacts on the Oil & Gas and Energy market?
Biden program for Oil & Gas and Energy
Following the flow of media headlines and political debates, the differentiation between true information and fake news became unclear.
If we stick on Joe Biden official statements, his election impacts on the Oil & Gas and Energy market stand on the following points:
- USA will return in the Paris Climate Agreement
The goal is to act in order to limit the global warming, by reducing the carbon emissions.
- USA will initiate an energy transition toward clean energies
Joe Biden will unveil a plan of $2,000 billions USD to sponsor the transformation of the automobile industry’s strategy, and the increase of clean electricity production.
- Limitation of CO2 emissions
All oil and gas production sites will receive target to reduce their carbon emissions and will be exposed to penalties.
- Reduction of drilling license on federal land and water
Joe Biden office will limit drilling licensing to favor clean energies. Yet, most of the shale oil and gas is not extract from federal lands, limiting the impact of this measure.
Program impacts on Oil & Gas and Energy
Undoubtedly, Joe Biden program is mainly oriented toward clean energies.
This program is presented as a game changer of the US energy, running in opposite way with previous US Oil & Gas industry strategy.
Joe Biden program first impact intends to turn the US into the main hub for clean energy worldwide. The expectation is to create a wave of opportunities and optimizing prices for Renewables and Decarbonation technologies.
Even if we can applaud for this ambitious program toward clean energy, we can also question the actual impacts toward Oil & Gas sector.
Most likely, the transition out of carbon will be incremental and won’t oppose the pursuit of a cleaner US Oil & Gas production.
First, because such a brutal change would require a full support from congress and senate, which is not the case because of the Republicans dominance.
Second, even if a 15 years transition is technically possible, it is financially and technologically challenging for the US economy. Fact is that shale Oil and Gas is the backbone of the national economy and the first sponsor of the industrial revival. In this context of crisis, Joe Biden won’t weaken one of US economy pillar.
Third, because we could see on last April how the US President had little influence on the OPEC and Non-OPEC summit to reduce US oil production. Saudi Arabia controls the market price. This price is the only regulator of the US oil production, while in other producing countries the governments can do it.
Thus, Joe Biden may foster the petroleum sector to become cleaner but not stop it.
US Election Side Effects on Oil & Gas
In addition to the clear and direct impacts of Joe Biden election, comes side effects benefiting to the Oil & Gas Market.
Latest Oil and Gas most harmful threat has been the uncontrolled development of the Covid Pandemic. It destroyed economies worldwide and plunged oil demand.
Joe Biden motivation to tackle the pandemic is a great news for US and global economy. Indeed, any sanitary recovery will contribute to restore the oil and gas demand.
Above all, given the effective power of the US President, the transition between Donald Trump and Joe Biden should have a limited impact on the fossil fuels industries. Instead, it should help the decarbonation and renewables industries to take off.
This way, Joe Biden should establish the new US energy strategy.
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