According to several major networks, Democratic aider Joe Biden won the US presidential election in November. Here are some of the changes that could occur in U.S. energy policy under his administration:
International oil supply
Biden was interested in multilateral diplomacy similar to the previous Democratic administration. This could mean the ultimate path for OPEC member states Iran and Venezuela to break free from Washington’s sanctions and start pumping again once appropriate conditions are met.
In Iran, the avenue may include a cooperative approach between the United States and Europe, similar to transactions concluded under the Obama administration.
In Venezuela, it appears that Biden will continue to favor sanctions to put pressure on President Nicholas Maduro’s regime, but negotiating new elections or sharing power with the opposition may increase diplomatic efforts to end the deadlock.
President Donald Trump’s unilateral sanctions result in about 3 million barrels of crude oil being spilled from international markets a day, just over 3% of world supply.
Biden’s campaign did not specifically reveal how to approach these issues.
Biden lacks the relationship Trump has developed with Saudi Arabia’s de facto leader, Prince Mohamed bin Salman. The country is the largest voice in the Organization of the Petroleum Exporting Nations, which means that Biden may not be closely involved in the group’s production policy. He is also more likely to rely on quiet diplomatic channels affecting OPEC than Trump’s tweeter-centric approach.
Biden’s campaign has not yet specifically revealed how he will approach these issues, but the influence he will exert as president is likely to serve the same goal: moderate oil prices. Every President of the United States needs cheap fuel. And for Biden, the price must be high enough to make a clean energy alternative to fossil fuels competitive to support an ambitious climate plan.
Trump was more involved with the Organization of Petroleum Exporting Countries than his predecessors. He occasionally influenced OPEC policy through his tweets and phone calls, claiming oil prices low enough for consumers but high enough for boreholes.
His sanctions also weakened the influence of Venezuela and Iran, OPEC hawks within the group, and removed two major historical hurdles to pro-Washington OPEC policy. This has focused forces with leading producer Saudi Arabia, along with Russia, which is part of the group known as OPEC+.
The Biden administration will rejoin the Paris Climate Agreement, an international agreement negotiated by the Obama administration to fight global warming, and Trump has not said it could harm the US economy.
Biden has also pledged to bring U.S. emissions to net zero by 2050, including net zero emissions from the power industry by 2035, which would be difficult to achieve in Congress without a majority of Democrats.
Biden’s view is that climate change is an existential threat to the planet, and the transition from fossil fuels could be an economic opportunity if the United States moves fast enough to become a leader in clean energy technology.
The Trump administration has taken steps to weaken or eliminate emissions targets, including easing the US Environmental Protection Agency’s vehicle emission standards and withdrawing former President Barack Obama’s clean power plan calling for cuts in the electricity industry. Transportation and electricity combined make up about half of the country’s greenhouse gas emissions.
European oil and gas companies such as BP and Royal Dutch Shell have already begun implementing strategies for global energy transformation, but US majors such as Exxon Mobil and Chevron are working on traditional energy businesses politically protected by Trump’s leadership in Washington. I keep focusing.
Trump has worked to maximize domestic oil and gas production, but Biden has pledged to ban the issuance of new drilling permits for federal land and waters to combat global climate change.
According to U.S. Department of Interior data, the U.S. produced nearly 3 million barrels of crude oil per day on federal land and waters in 2019, and 13.2 billion cubic feet of natural gas per day, according to data from the Department of Home Affairs.
This is about a quarter of total domestic oil production and more than a quarter of total U.S. gas production. The federal ban on new permits implies the trend of these numbers going to zero over the years.
It will also affect public revenue for federal oil and gas production, which generated approximately $12 billion in public revenue in 2019, divided between the U.S. Department of Treasury, State and County, and Tribal and Cleaning Funds.
New Mexico, for example, received $2.4 billion in expenditures last year, most of which moved to a historically underfunded education system. State Democratic Governor Michelle Lujan Grisham told Reuters this spring that if Biden is elected, he will seek immunity from the Biden government to allow drilling to continue.
Biden’s camp was sorry for the existence of such a waiver program.