The U.S. oil and gas industry has seen significant growth under the Biden administration, with major oil companies doubling their profits and energy shares increasing by 117%.
However, with the upcoming presidential elections, there is speculation about how the industry might fare under a potential second term for Trump or a continuation of Biden’s policies under Vice President Kamala Harris.
Industry Performance Under Biden
Despite being the most pro-renewables administration, the Biden government has overseen a flourishing oil and gas industry.
Landmark legislations such as the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) have played pivotal roles.
The five largest publicly traded oil companies—Exxon Mobil Corp. (NYSE), Chevron Corp. (NYSE), BP Inc. (NYSE), TotalEnergies SE (NYSE), and Shell Plc (NYSE)—saw their profits soar to $410 billion during the first three years of Biden’s presidency, a 100% increase compared to the same period under Trump.
This surge was largely driven by the oil price rally triggered by Russia’s war in Ukraine.
Investors in the oil and gas sector have been significantly rewarded, with energy shares jumping 117% since Biden assumed office, in stark contrast to the 49% decline during a comparable period under Trump.
Predictions for the Future
Citi predicts that if Harris continues Biden’s policies, the U.S. energy sector would likely remain stable.
Conversely, another Trump presidency might result in bearish conditions due to potential trade tariffs, oil-and-gas-friendly policies, deregulation, and pressure on OPEC+ to release more oil into the market.
Trump’s previous administration famously advocated for aggressive drilling policies, which, while promoting energy independence, could lead to lower oil prices.
Renewable Energy and Emissions
The renewable energy sector could face significant setbacks under Trump. Energy analytics firm Wood Mackenzie forecasts that another Trump term could increase carbon emissions by 1 billion tonnes by 2050 and delay the peak in fossil fuel demand by 10 years.
This would reduce the overall spending on low carbon energy and infrastructure improvements by $1 trillion.
However, this scenario could benefit natural gas, boosting demand by 6% or 6 billion cubic feet per day by 2030.
Geopolitical Implications
A second Trump presidency might also impact international oil markets. Trump could attempt to restrict Iran’s rising oil exports and slow down the push for electric vehicles (EVs).
Recently, Standard Chartered analysts reported a significant increase in Iranian oil exports, facilitated through ship-to-ship transfers in Malaysian waters.
China’s crude oil imports from Malaysia reached 1.456 million barrels per day in June, the second-highest monthly average on record.
With Malaysia’s production and exports much lower, the majority of this oil likely originates from Iran. Under Trump, Iran’s oil production fell from 3.8 million barrels per day in early 2018 to under 2 million barrels per day by late 2020, only to rebound to 3.2 million barrels per day under Biden.
Conclusion
The U.S. oil and gas industry faces different potential futures depending on the outcome of the upcoming presidential elections.
While a Harris presidency might continue the current policies favoring renewable energy and maintaining industry growth, another Trump term could lead to increased production, lower oil prices, and setbacks for renewable energy initiatives. The industry’s performance under these contrasting scenarios will significantly impact both domestic and global energy markets.
Source: Oilprice.com