Page 10 - NorthAmOil Week 01 2021

NorthAmOil COMMENTARY NorthAmOil

US President-elect Joe
Biden will now benefit
from a Democrat-
controlled Congress.

A key priority for Biden will be tackling the important to sacrifice in the shorter term.
coronavirus (COVID-19) pandemic. He has However, Biden is expected to favour restric-
already announced the names of the team he tions on new drilling on federal land – but given
will assemble to co-ordinate the federal govern- that the majority of US oil and gas production
ment’s response to the pandemic on the public comes from public land, the impact of any new
health side, and economic stimulus measures restrictions is expected to be limited.
are also anticipated in the near term. On the infrastructure side, regulatory
In terms of energy policy, Biden is expected approval processes could become more oner-
to pay a lot more attention to the energy tran- ous, especially for pipelines, which have been
sition and decarbonisation, in a reversal of the generating significant amounts of controversy
trajectory of Trump’s energy policy. Biden has and local and environmental opposition in
already said he would seek to promptly bring recent years.
the US back into the Paris climate accord, from Internationally, Biden has shown an interest
which Trump officially withdrew the country in multilateral diplomacy, which could ulti-
in 2020. mately result in the lifting of sanctions against
Biden’s election pledges include achieving net Iran and Venezuela. However, this outcome
zero greenhouse gas (GHG) emissions from the would lead to a flood of Iranian and Venezuelan
US by 2050. This target, which includes mul- oil onto the global markets, which would hurt Biden has shown
ti-billion dollar investments in clean energy US crude producers by weighing on oil prices at
and innovation, also implies a gradual transition a time when they are already struggling with the an interest in
away from fossil fuels. current market downturn. multilateral
A Democrat-controlled Congress makes a Investment bank Morgan Stanley com-
carbon tax more feasible for Biden if he wishes mented in November – as it was becoming diplomacy,
to introduce one. It is thought that such a tax clear that Biden would win the election – that
could be applied to imports in order to put pres- the addition of significant non-US oil volumes which could
sure on trade partners that are failing to meet to the market would be “bearish for global oil
climate change obligations. prices” and would create “challenges for OPEC ultimately result
cohesion”. However, the bank added that the in the lifting
What next? feasibility and timeline of any new nuclear deal
For domestic oil and gas producers, Biden’s pres- with Iran was unclear. Once again, though, of sanctions
idency, and his aim for a long-term shift away Congressional support makes it easier for Biden
from fossil fuels, means a more uncertain future. to move towards a potential Iran deal. against Iran and
However, in the run-up to the presidential elec- Prior to the Democrats’ Senate runoff victory
tion, Biden sought to reassure the industry that in Georgia, Biden’s path forward appeared more Venezuela.
he would not seek to ban hydraulic fracturing. challenging. Now, the industry is assessing what
Indeed, given the importance of reviving the the changing political landscape will mean.
economy after the pandemic, the employment More commentary from analysts, producers
and tax revenues that the oil and gas indus- and other industry players is expected to follow
try generates are likely to be considered too in the coming days.™

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