November 11, 2020//-US President-elect Joe Biden is expected to return America back to a few global diplomatic platforms vacated by the outgoing President Donald Trump under his “America first” agenda.
One such action is Biden’s plan to rescind US withdrawal from global climate change agreements and commitments, a step that will enhance overall global carbon targets compliance.
While climate change is a global priority, it should be realistically accepted that the most urgent priorities for Biden administration will be containment of Covid-19 pandemic and revival of US economy.
However, it is expected that the two congressional climate change “champions”, Rep Ocasio-Cortez, and Senator Bernie Sanders, will relentlessly ensure Biden follows through on the climate change manifesto.
Aware of the sensitive US oil and gas political base, Biden will most likely choose to do only the bare minimum policy and regulatory interventions in this sector, while also avoiding direct and open castigation of oil and gas.
Notwithstanding, the US carbon-heavy oil industry is expected to gradually and systematically trim down under the influence of the ongoing global renewable momentum and global oil market realities and strains caused by over-supply.
Oil majors
The US oil majors (ExxonMobil, Chevron etc.) will, even without Biden interventions, follow their European counterparts (Shell, Total, BP etc.) in the ongoing energy transition to renewables, a necessary survival business model.
Pressure from financiers, shareholders and environmental groups will continue to prompt US oil majors’ shift to low carbon energy footprints.
Biden is likely to specifically emphasise combined economic and green benefits associated with renewable energy, by including renewable projects in his economic recovery stimulus to recreate jobs destroyed by Covid-19.
This may entail subsidies to renewable energy — solar, wind, and road transport electrification. This would simultaneously enhance US global positioning in these critical energy technology sectors where it is lagging European Union and China.
On a global perspective, Biden presidency is likely to generally induce renewed economic confidence across the world, and this could prompt increased oil demands and strengthened prices, subject of course to negative economic pushback from Covid-19, which continues to impact most parts of the world.
Specifically, it will matter most what trade policies Biden develops with China whose economy has been negatively impacted by Trump’s trade wars.
It is difficult to separate oil and gas from global geopolitics. Currently, there are four economic sanctions by US that are directly impacting oil and gas supply equilibrium. The 2014 Obama sanctions on Russia over the Crimea issues are still in force.
US sanctions on Iran, Venezuela, and the latest sanctions on Russia’s Nord Stream 2 natural gas project are Trump’s additions to the US sanctions list. All these sanctions impact global oil and gas supplies in varying degrees, and it will be interesting to watch how Biden will handle them.
Specifically, it is highly anticipated that Biden will soften the economic stranglehold on Iran and conditionally remove most of the economic sanctions.
If this happens, Iran will pump more oil barrels into the world markets, with the unintended consequences of upsetting already strained global oil over-supply and prices, news not quite politically welcome to US shale oil producers. Yes, leadership and politics are a game of shrewd policy balancing.
In summary, I believe Biden will adequately and positively verbalise US policies for transition to renewable energy and support global climate initiatives, while remaining politically cautious about US oil and gas jobs.
Overall, there is no indication that Biden presidency will significantly alter current global oil markets status quo, which is under Covid-19 stranglehold.
With the US elections over, I now feel free to openly comment on Trump’s leadership over the last four years. He has globally embarrassed the US, and nearly ruined a global model of democracy through his bullying and haphazard leadership.
Unfortunately, he appears to have created a sizable “cult” of followers who sincerely believe in him, making it difficult to recreate the America the world used to know.
Yes, it takes only a short time of irresponsible leadership to bring down a nation painfully build over many decades, and this can happen to any country. Therefore, it matters who countries elect to high leadership offices.
