It was one of the somewhat tense moments of the debate between Donald Trump and Joe Biden on October 22. The question of oil arrives on the table. The Democratic candidate, who knows that the black gold industry is not for him, attacks ball in head. “I will gradually turn away from the oil industry, yes […]. I will stop because the oil industry is very polluting. Joe Biden explains that renewable energies will replace fossils “over time”. Trump is jubilant. The incumbent president, who has continued to free the sector from obstacles decided by his predecessor Barack Obama, can stroke his electorate in the direction of the hair. “It’s a hell of a statement!” Retorts the Republican. he [Biden, NDLR] destroyed the oil industry. Will you remember it in Texas? Will you remember it in Pennsylvania, Oklahoma, Ohio? “
The vote of miners, and arguably much of the oil industry, was not enough for Trump. But will Biden keep his campaign promises? The question of energy is very sensitive in the United States, where the sector employs some ten million people, according to a study by PricewaterhouseCoopers. During his campaign, Joe Biden had to deal with two obligations: on the one hand, the need not to offend too much this pool of voters nor to damage this important economy, on the other, the need to take into account the left wing of the Democratic Party, concerned with putting an end to carbon energies. “There is what is fair, the climate, and what is less so, the preservation of the oil industry, provider of millions of jobs”, observes Maxence Cordiez, energy specialist and author of a well-documented article on the subject published on the Connaissance des energies website.
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Biden is obviously sensitive to the environmental issue. He promised that as soon as he entered the White House, the United States would return to the Paris agreement signed at COP21 at the end of 2015. But Joe Biden was also the vice-president of Barack Obama, under whose mandates the Shale gas and oil production has exploded in the United States. Thanks to this unconventional resource, the country has become the first oil producer in the world, acquiring virtual energy independence. As for its national champions, such ExxonMobil and Chevron, they are turning their backs during the crisis and continue to invest in unconventional energies. In July, didn’t Chevron put $ 13 billion on the table to buy out Noble Energy, a major player in shale oil?
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From the Oval Office, Biden is unlikely to embark on a crusade against the industry. “He obviously knows that oil and gas are essential to the country’s economy,” observes Francis Perrin, associate researcher at the Policy Center for the New South and director of research at Iris. In any case, if the future president attacked the interests of the oil companies too head-on, he would find the Senate on his way, still with a Republican majority today. Its vice-president seems on the same line. On several occasions during the campaign, Kamala Harris announced that hydraulic fracturing, through which the resource is extracted from the bedrock, would not be called into question, despite the pollution it generates.
Candidate Biden, however, assured during the campaign that he would reverse the all-out deregulation imposed by Trump in favor of fossil fuels. Monitoring of methane leaks on pipelines could thus be strengthened, and flaring, which allows gas to be burned during oil extraction, limited. “The oil companies know that they will lose their feathers, they are resigned to it,” notes Francis Perrin.
A gesture towards Iran?
There is, however, one point that bristles them, and against which they will launch their lobbyists: the federal state could stop issuing new exploitation permits on its lands, whose resource potential is great. This announcement, hammered out by Biden under the influence of the left wing of the Democratic Party, is not good for business. Their entire future is at stake, as unconventional oil wells run out quickly. We must constantly invest, and drill. They had therefore anticipated this ban, which will undoubtedly be implemented by Biden, by increasing the number of permit applications before the election… “The oil companies will want the Biden administration to come back to this point. This will be a priority issue, ”says Francis Perrin.
Internationally, the effects of the Biden presidency are more difficult to assess. In addition to reinstating in the Paris agreement, Biden assured that the United States could make a gesture towards Iran, commercially sanctioned by Trump. Iranian oil exports in particular are badly affected. But, beforehand, Biden wants Tehran to respect all of the commitments recorded in the agreement on Iranian nuclear power, signed in Vienna in 2015, and from which Trump left in 2018. “The ball is in the court of the Iran, ”notes the Iris researcher.
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A gradual resumption of production and exports of Iranian crude would hardly suit the producing countries, since the price of a barrel of Brent is still sluggish (it is evolving these days around 44 dollars a barrel). The OPEC member countries also have another priority in mind: they meet in early December in Vienna to decide, with Russia in particular, whether they continue to reduce their production in order to support prices. In making their choice, they will have in mind a factor much more important than the arrival of Biden in the White House: the effects on the economy of the Covid.