Joe Biden, good news for the Canadian oil sector?

The United States and Canada are going to be on a much more equal footing, explains Max Fawcett, former editor of the magazine Alberta Oil and former advisor to the Alberta climate change ministry.

The problem over the past four years, he adds, is that we have seen oil regulations generally become stricter in Canada, while south of the border Donald Trump has only done so lighten the rules for oil companies.

And because Alberta’s energy sector competes directly with that of the United States, Canada was at a disadvantage in a way. In the last four years, if you were an investor, it was more profitable to put your money in projects south of the border. précise Max Fawcett.

In August 2020, the Trump administration elected to eliminate some of the regulations surrounding methane leaks. Democrat Joe Biden has promised to put in place strict limits for oil sites that emit this highly polluting greenhouse gas.

Photo: iStock / bashta

However, the future Biden administration is likely to be much more tough towards the American oil sector and, therefore, to approach the rules in place in Canada.

Joe Biden, for example, wants the United States to become carbon neutral by 2050. He wants polluters to pay for their carbon emissions and he has promised to institute stricter standards to limit methane emissions.

What really hurt the Canadian industry [dans les dernières années], it is the boom in American production of shale oil.

Pierre-Olivier Pineau, professor and holder of the Chair in Energy Sector Management at HEC Montréal

But like Joe Biden is not fan of hydraulic fracturing “,” text “:” the biggest fan of hydraulic fracturing “}}” lang = “fr”>the biggest fan hydraulic fracturing, explains the specialist in energy management Pierre-Olivier Pineau, the American oil industry is not likely to be favored by the next president.

And that’s good news for Canadian producers, he specifies.

When Trump wanted to lower oil prices

The other challenge Donald Trump posed for Alberta was his desire to keep oil prices relatively low.

According to analyst Max Fawcett, the US president knew that to satisfy his base, he needed gas at the pump to be affordable.

Because, yes, the oil companies in Texas may have had an advantage in keeping prices high, but that is not the state in which the 2020 election was played out.

To be re-elected, Donald Trump had to win in places like Pennsylvania, Michigan, Wisconsin, Florida. None of these states produce petroleum. However, the voters who live there consume gasoline. The president’s priority was therefore to have prices as low as possible., avance Max Fawcett.

In 2018, for example, Donald Trump put pressure on Saudi Arabia to increase production, flood the market and therefore lower world prices.

Donald Trump shakes hands with Mohammed bin Salman.

US President Donald Trump with Saudi Crown Prince Mohammed bin Salman.

Photo : Reuters

We don’t risk seeing Joe Biden pick up the phone and call Crown Prince Mohammed Ben Salman to make the same request, adds Max Fawcett. In that sense, he said, we could see potentially higher oil prices with the next president, which would once again benefit the Canadian energy sector.

The famous pipeline

Of course, Alberta is not all smiles when Joe Biden comes. Democrat opposes pipeline project, strongly defended in the Prairies: Keystone XL. The pipeline, when completed, must transport 132 million liters of oil per day to refineries in the Gulf of Mexico and is seen as a means of opening up Albertan black gold.

Deer roam around pipes stored for pipeline construction.

Stored pipes to be used in the construction of the Keystone XL pipeline.

Photo : Reuters / Terray Sylvester

But even there, several experts wonder if Joe Biden will keep his promise to cancel the construction of the pipeline. This is the case of Professor Pierre-Olivier Pineau, who believes that the American politician could stir up a dispute and perhaps burn political capital by terminating a project that has already received a presidential permit.

According to him, what would be more profitable for Joe Biden is to put forward policies that will truly reduce greenhouse gases and structurally change consumption in the United States.

The president-designate has also promised to invest US $ 2 trillion in green recovery – money that will be used, among other things, for the development of zero-emission cars and the decarbonization of electricity production.

What matters in greenhouse gases is what we consume, not how what we consume is transported.

Pierre-Olivier Pineau, professor at HEC Montreal

And this is where Joe Biden’s arrival could hurt Canada’s oil industry – in the much longer term: If, eventually, oil consumption decreases, then this pipeline project will no longer be used or no longer useful, and that is what is decisive., he concludes.

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