Waking the sleeping giant, the Biden administration and card-carrying democrats have decided to redirect attention from the coal sector and channel it fully on the oil and gas industry, all in the name of climate change. Having once been the major source of power generation for decades, coal faltered against the natural gas conversion. Becoming the industry leader, the industry has found itself with a target on its back and in the sights of the current administration’s climate-change crusade.
At the heart of Democrats’ climate change issue, government fuel sales find themselves in question. This is largely due to oil and gas now becoming the major source of greenhouse gas emissions. As a result, the major players of oil are trying to coexist with the federal government. Fortifying their stronghold, these companies are seeking support from Republican lawmakers as the Biden camp attempts to play the moratorium card on both oil and gas lease sales.
The larger oil companies mapped out a strategy for challenging times. They have spent and injected large sums of capital into local communities. As vast as the amount invested, the geographic playing field stretches from Alaska to the Gulf Coast and then to Casper, Wyoming, the hub of Rocky Mountain drilling. This financial chess match has proven troublesome for the Biden camp as they attempt to find a happy balance between a robust action on climate change while still wanting to take advantage of any cash input while recovering from the COVID-19 crisis.
“You’re not hurting the big guys that are doing all the development. You’re hurting these little guys that are dreaming up where no one else thought there was any oil and gas,” said Steve Degenfelder, Land Manager for Kirkwood Oil and Gas.
Driving Home the Drilling
In any war, strategy is crucial in this current situation. Planning for a potential Biden win, oil companies shored up their positions and secured drilling permits on public lands resulting in a significant increase under the Trump administration.
Having previously secured approximately 500 drilling permits, Devon Energy indicated they were prepared to go the long haul with a Biden presidency. That basket of permits will carry the company for several years in New Mexico and Wyoming.
“They expected this…They prepared for it,” said Associate Professor Robert Lifset who teaches U.S. Energy Industry history at the University of Oklahoma. “But the difference now is going to be stark. (Oil and gas companies) don’t get to run energy and environmental policy in the way they once did.”
This translates as various changes have been made on the management side which now leads to a more difficult process. Trump’s loyal soldiers of the energy industry are now dispersed and scattered. David Bernhardt, Trump’s former Interior Department Secretary who once managed laxed drilling regulations is no longer in the game. Comparatively, Biden’s appointees as a majority are nearly all environmentalists and critics of the oil and gas sector itself. In fact, the current nominee for Interior Secretary, New Mexico Representative Deb Haaland, possesses an anti-oil history of her own.
Moratorium Residual Effects
Although Trump is no longer the Commander and Chief, the oil and gas industry still carries representation within Congress. They project significant job loss down the road due to the moratorium. Additionally, economic analysts hypothesize that a ban on new leases of oil and gas could take an extended period of time to display any positive effect on the climate.
Combatting the moratorium, oil and gas companies could shift a portion of their portfolio onto domestic private lands. According to economist Brian Prest, additional oil would probably flow in from international markets. His analysis represents research directed at a long term leasing ban conducted for the Resources for the Future research group.
Prest deduced that a moratorium would account for nearly three-quarters of the reduction in greenhouse gas emissions but could be offset from other oil and gas sources. The end game would calculate a net reduction of carbon dioxide equalizing 100 million tons per year.
The Road Ahead
The oil and gas industry is no stranger to struggle and challenge, although the current bid seems far more dangerous than the opposition received in recent years. With climate change being at the center of the anti oil and gas argument, Associate Professor Lifset considers additional threats. Growing in popularity, the electric vehicle (EV) market is hot on the oil and gas trail. Proving that startling reality, the auto manufacturers of Volvo and GM have publicized recent plans to transition to the EV market from gasoline, which historically has accounted for nearly half of the oil and gas market.
“The real threat is not the government limiting production,” said Lifset. “It’s the economy and the culture moving away from consuming oil and shrinking the market.”
No matter the factors at this point in time, major players of the oil and gas market have leveraged, streamlined, planned and countered in order to survive the initial threat of a political majority who for the most part is not a friend to the industry. While these countermeasures playout in hopes of surviving these difficult times, the smaller companies are met with additional concern. With the inability to muster finances for the long haul, they will find themselves struggling to tread water.
In the end, however, it will all be for nothing should the demand drive the market away from oil and gas and to alternate sources. Moving ahead, all members of the oil and gas industry need to perform more efficiently and adapt. Shoring up and re-establishing demand will gain public support in countering moratorium effects. Only then can a fair and honest debate be had for the co-existence of crude and alternate energy.