If Joe Biden becomes the next president of the United States, the energy industry will feel the pinch, with onshore gas and offshore oil being the most vulnerable industry segments, Moody’s has said, as quoted by Natural Gas Intelligence.
The Democrat candidate has already made public a clean energy plan that will cost $1.7 trillion and that will focus on research and development of new clean energy solutions to the climate crisis.
This in itself would be negative for the oil and gas industry, if successful, as it will dampen demand for their products. But Biden has also promised his voters to stop offering new offshore oil and gas leases and to ban new drilling on federal land, even though he stopped short of promising a ban on fracking.
But federal leases for oil and gas production accounted for more than a fifth of the United States’ annual oil and gas production last year. Oil from offshore fields in the Gulf of Mexico accounted for 64 percent of oil output from federal lands, Moody’s senior oil and gas analyst John Thieroff said in a note this week.
“The mix of onshore producers is much broader than offshore, with major oil companies operating alongside such independent exploration and production [E&P] companies as EOG Resources Inc., Concho Resources Inc. and Devon Energy Corp.,” Thieroff said, adding “Gas production from onshore federal leases is heavily concentrated in Wyoming, New Mexico and Colorado, which together accounted for almost 90% of the 2019 total.”
Biden’s climate plan envisages incentives for consumers to switch from gasoline and diesel cars to EVs and get more of their electricity from solar and wind installations. According to analysts, the transition will not change electricity prices in any palpable way because it will happen slowly and gradually.
“Trump is fossil fuels first, [and] the objective is to resuscitate oil,” Stewart Glickman, energy analyst at CFRA Research, told CNBC. “Biden is discouraging fossil fuels, in a muted way. He’ll promote something different, and that something different will take time to build.″
By Charles Kennedy for Oilprice.com