https://www.axios.com/2024/11/01/oil-production-future-harris-trump-election
Nov 1, 2024 -Ben Geman
If past is prologue, Tuesday's election won't have much effect on U.S. oil and gas production anytime soon.
Why it matters: Yes, the divide between former President Trump and Vice President Harris is big.
- But federal policy is just one of many things that sway output, which has little historical relationship to the party in power (see above).
Here are a few checks on that influence in both directions...
Corporate strategy. "The industry's shift towards prioritizing shareholder returns and long-term growth through acquisitions has led to a more disciplined approach to investment," Rystad Energy analysts said of onshore shale.
- Their note says it's "uncertain" if Trump could increase shale production, which has been the main growth area, beyond its current upward rate.
Geopolitics. U.S. production and exports provide strategic leverage during crises — something that hasn't been lost on Biden officials.
- Consider that Biden officials pushed for more oil output after Russia invaded Ukraine. High production also tempers the cost effect of potential Middle East supply disruptions.
- ClearView Energy Partners say Harris is "unlikely to wholly abandon the Biden administration's wartime fossil fuel pragmatism" even if today's conflicts end.
Markets. Oil production levels are responsive to prices, and they're largely at the mercy of global markets and economic conditions.
- Regulatory changes and costs certainly affect producers' decisions, but that can be swamped by very attractive or very low commodity prices.
The courts. Biden's energy transition policies face hurdles before a Supreme Court skeptical of federal agency interpretations of the law.
- But that could also affect Trump's deregulatory push. "A Trump administration could face a ruling binding it to certain IRA provisions it may oppose, such as the methane fee," Atlantic Council experts write.
Wild cards. Trump's policy changes could have unpredictable effects, even though they're quite supportive of the industry in the main.
- For instance, rolling back methane rules "could create potential headwinds for domestic producers looking to sell into increasingly regulated overseas markets," ClearView notes.
Yes, but: Mike Sommers, head of the American Petroleum Institute, told Axios that presidents can have major influence — though some of it takes years to become apparent.
- "I think what we've seen from the Biden era policies have been attempts to cut long term oil and natural gas production in the United States," he said, calling this "most dramatic in federal lands and federal waters."
State of play: He said one example is pared-back leasing in the Gulf of Mexico, where projects take many years to start flowing.
- Nearer-term, policies like the IRA's methane fee can affect production decisions, Sommers said.
The bottom line: I'm not trying to "lol nothing matters" the climate and energy policy differences — they're big and have international stakes.
- But on oil and gas output in particular, there's a lot more going on.
- "While Democrats will impose more restrictions than Republicans, supply will rise no matter who wins," the research firm BloombergNEF said in a note.
