Effects Of Joe Biden's Victory To The US Shale Industry
Openly, Joe Biden is seeking to adopt a number of changes in policy to the present Trump administration. With his stated determination to reduce the United States' dependence on fossil fuels and increase focus on renewable energy, fracking is bound to face greater restrictions and many shale operators are starting to get concerned.
So, how big of an impact will Biden's policy have on the shale industry and the US economy?
The US Fossil Fuels Industry
At present, the oil and gas industry supports the US economy by providing an estimated 10million skilled jobs, generating more than a third of the electricity the country consumes and making road transport relatively affordable. It is clear that hasty action against the fossil fuels industry will be ill-advised as well as potentially disastrous, particularly as the world grapples with the economic fallouts of the Coronavirus pandemic. On the other hand, it is also clear that the industry is facing a slow and steady decline.
For the most part, the Trump administration has favored the shale industry with fewer restrictions and the industry has flourished as a result. The vast majority of shale drilling takes place on state-owned or privately owned property and Biden's first decisive move would be to curtail drilling on federal lands. He's also expected to impose stricter regulations on emissions and also roll back many tax incentives. Biden's planned strategy is to slowly wane the market off fossil fuels by systematically reducing the production of fossil fuels and increasing the costs of production.
Should Shale Operators Be Concerned?
By his own admission, the Biden administration will give shale operators a very hard time with a potentially aggressive climate policy in the pipeline. Nevertheless, any changes to policy is unlikely to be too abrupt or too uncomfortable, because in the words of the president-elect, fracking needs to continue due to the need for a transition and the absence of any pressing need to completely eliminate it immediately.