Editorial: Hanging in the balance?

Pennsylvania, Ohio, and Texas are the biggest oil and gas producing prizes in the electoral college. Pennsylvania has 20 electoral votes, Ohio has 18, and Texas 38. Together that’s more than 28% of the 270 required to become President. Pennsylvania hosts Marcellus shale, the country’s largest natural gas field with 135.1 tcf of proved reserves. Ohio’s Utica shale has proved reserves of 23.9 tcf; fifth largest in the country, with the three plays in between all lying in Texas, home of the Permian basin, the country’s largest crude play.

Pennsylvania was one of the key states Trump won in 2016 to secure his election. As of Oct. 26, former Vice-President Joe Biden was leading a composite average of polling in that state by 5.6%. Ohio has been a swing state for decades. It looks set to be one again, Trump leading in the polls by 1.5% and neither candidate claiming more than 50% of respondents. Trump’s lead in Texas, which has voted consistently Republican since the mid-1990s, was 1.2%. Whichever candidate wins two out of three of these states will likely win the election.

Biden says he’s not going to ban hydraulic fracturing. But his environmental plan calls for aggressive methane pollution limits. He also supports banning new oil and gas permitting on federal lands and waters and examining existing wells to see if they are dangerous or have already caused damage. Other aspects of the Biden plan include removing Arctic waters from consideration for oil and gas leasing and reducing greenhouse gas emissions from transportation.

Trump doesn’t share any policy plans on his campaign site. In an Oct. 21 press release from the US Department of Energy, however, Secretary Dan Brouillette touted the administration’s commitment to protecting American jobs and promoting energy exports. Deputy Secretary Mark Menezes echoed these sentiments, saying in the same release that “securing US energy jobs and creating potential for future growth in our energy sector is a top priority for the President’s Administration.”

The President himself has also made it clear in a variety of settings that he would continue to roll back Obama-era regulations that limited oil and gas activity.

Third parties

A mid-October analysis by Goldman Sachs said that a Biden presidency would be positive for the US upstream since associated regulations would likely raise oil prices as compared with a second Trump term. The investment firm also opined that the net effect of either candidate’s election would be limited in comparison with “the more powerful shift in investor focus” away from fossil fuels.

Industry analysts Wood Mackenzie suggested a demand-related upside, noting that “in the short term, a Biden victory, if combined with Democratic control of the Senate, is likely to result in greater fiscal stimulus for the economy, which is likely to translate to stronger economic growth and higher fuel demand. In the longer term, the election result is likely to have a small effect on US fuel consumption, but only at the margin,” with WoodMac forecasting a steady increase in fuel economy regardless of policy decisions.

The American Petroleum Institute’s (API) commentary following the final presidential debate was noticeably centrist: ““Democrats, Republicans and Independents know that the US natural gas and oil industry delivers affordable and reliable energy to American families and businesses and all over the world. We are proud of the grit, innovation and progress we’ve made so that Americans no longer have to choose between environmental progress and access to affordable, reliable and cleaner energy. And we aren’t going anywhere.”

API’s realism and pragmatism reflect recognition that it’s going to need to continue to effectively represent the interests of the industry regardless of who wins the election. Such representation could me more necessary than ever given Biden’s debate statement that he “would transition [away] from the oil industry.”