What would a Biden presidency mean for the oil industry?

What would a Biden presidency mean for the oil industry?
Source: Brian Snyder, Reuters
After suffering as a result of the coronavirus pandemic and the collapse in international travel, the oil industry faces another potential disruption – a Joe Biden presidency.

In the final weeks of the presidential campaign, yet another battleground has opened between the two candidates vying for election this November – oil.

After suffering as a result of the coronavirus pandemic and the collapse in international travel, the oil industry faces another potential disruption – a Joe Biden presidency.

As part of a wide-ranging green policy adopted by former Vice President Joe Biden, a Biden administration would seek to shift America’s energy focus away from fossil fuels, including oil, to “greener” alternative sources.

Republican President Donald Trump, who has sought to paint himself as a “great environmentalist” despite his personal support for opening up America’s wildlife refuges for further oil drilling, seized on comments made by Biden during the final presidential debate in October. During that debate, Biden said that he would “transition” away from the oil industry.

Trump himself has claimed that these comments were “the most shocking admission ever uttered in the history of presidential debates,” meaning “NO fracking, NO jobs, and NO energy” for American families, especially those in swing states such as Pennsylvania.

But experts are not so sure. Jobs in the oil industry have long since been undergoing a decline, compounded by the COVID-19 pandemic. Meanwhile, some of the fastest-growing occupations in the United States are expected to be in clean energy production.

Whether the US can look to an increasingly oil-free future or not depends on November’s election. Regardless of who wins, however, uncertainty around the already imperiled oil industry is almost certain to remain.

The future of oil

Under President Trump, the oil industry has found a valuable ally.

Trump’s record on energy has been consistent, to say the least. He has consistently favored stripping away environmental regulations and expanding drilling projects. Trump has also led the US to exit the Paris climate accords.

The president has also opened up more and more protected lands, including lands designated as national monuments and wildlife refuges, for lease to oil and fossil fuel companies for drilling projects.

Despite having the full support of the president, the oil industry in 2020 faced an enemy that government leases and subsidies could not counter – the coronavirus pandemic.

The pandemic, which crippled international travel and demands for fossil fuels, catalyzed a remarkable collapse in the price of oil, which at one point dropped into negative figures.

The pandemic also compounded a long-term decline in employment in the fossil fuel industry, despite shale oil “booms” in the past decades that led to momentary upticks in jobs.

The climate plan put forward by Trump’s Democratic challenger, former Vice President Joe Biden, could not be more different from the policies advocated by the president.

In terms of energy, Biden’s climate plan – though falling short of more radical proposals such as those contained within the “Green New Deal” – still calls for a mass transition away from fossil fuels. The plan aims to achieve net-zero emissions by 2050, commits US$40 billion annually for clean energy research, and ends government subsidies for fossil fuels by 2035.

Presently, lowball estimates show that the US government spends roughly US$20 billion a year, directly, to subsidize the fossil fuel industry.

During the final presidential debate in October, Biden stuck to his platform, affirming that he would “transition from the oil industry.”

Job killer or job creator?

Critics immediately seized on the Democratic challenger’s comments. Lindsey Graham, the Republican senator from South Carolina, commented that “Biden just lost Pennsylvania tonight,” following his comments on the oil industry.

President Trump stated that Biden planned to “ABOLISH the entire U.S. Oil industry,” in a tweet targeted toward “Pennsylvania Families,” a key swing state that could decide the 2020 election.

Trump’s claim has been one of many in the closing stages of the campaign that has deliberately misrepresented Biden’s actual platform on several key issues.

Despite this, Trump has continued his attacks on Biden’s commitment to “transition” away from fossil fuels at his recent rallies, again targeting these critiques at undecided voters in swing states.

The president stated that Biden’s plan was an “economic death sentence for Pennsylvania’s energy sector,” hearkening back to past statements in which the president has blamed blackouts in California on renewable energy sources.

But, according to experts, President Trump’s argument that any “transition” away from the use of fossil fuels would be tantamount to “abolishing” the entire oil industry and its jobs lacks evidence.

Biden’s plan itself argues that a transition to alternative energy sources would prove an opportunity to retrain hundreds of thousands of Americans, while creating potentially millions of new jobs.

Biden campaign policy director Stef Feldman has even claimed that “the climate plan is a jobs plan. Our jobs plan is, in part, a climate plan.”

These claims are largely backed up by a reading of the state of the green energy and fossil fuel industries. The clean energy industry employs just under 800,000 Americans, compared with just over 1.1 million in the traditional fossil fuel industry.

But, unlike the job decline witnessed in the fossil fuel industry, some of the fastest-growing occupations in the US are to be found in renewable energy. One of the fastest, in particular, are wind turbine service technicians, with the wind industry currently employing 120,000.

Renewable energy jobs have overall increased significantly from their 2018 levels that saw 550,000 employed in such jobs.

Biden’s plan, then, far from “abolishing” fossil fuel jobs, hooks into a growing trend that takes into account the fact that fossil fuel jobs are stagnating or declining while being propped up by government subsidies, whereas renewable energy jobs are continually on the rise.

For Gilbert L. Michaud, an Ohio University professor who specializes in energy policy and workforce transitions, the “transition” from fossil fuels pledged by Biden could thus prove an opportunity for “displaced oil industry workers.”

Removing subsidies from fossil fuels alone would “force the industry to compete on its own with alternative energy forms, many of which are now cheaper,” Michaud told TMS.

Furthermore, Michaud argues, “in many instances, the skill sets for fossil fuel to renewable energy workforce transitions overlap rather nicely,” meaning jobs could be shifted relatively easily from one industry to another.

Follow the money

Though workers could presumably take up new jobs in a growing green industry, what would this mean for the oil companies likely to be the hardest impacted by such a dramatic change under a Biden presidency?

According to Solomon Goldstein-Rose, former Massachusetts state legislator and author of “The 100% Solution: A Plan for Solving Climate Change,” oil companies will simply follow where the money is going, to green energy.

“Oil companies will shift their investments in the directions that make money. We’ve started to see some of them diversify into renewables,” Goldstein-Rose argued.

Though Biden would certainly shift away from an energy reliance on fossil fuel companies, these companies’ expertise and knowledge will likely be needed for the future.

For instance, “to decarbonize globally by 2050 we will need to use clean electricity to synthesize hydrogen, ammonia, and carbon drop-in fuels for applications that can’t be electrified,” Goldstein-Rose explained to TMS.

Though their traditional business will be lost, Goldstein-Rose said, oil companies’ expertise and their “extensive distribution network” will be vital in producing the synthetic fuels that work alongside a clean energy transition.

In the end, the claims made by President Trump and other detractors that Biden’s climate plan would see nothing less than the “abolition” of the oil industry and the jobs that go along with it seem to be baseless.

Though there is no denying that a transition toward green energy sources would be profoundly unsettling for the fossil fuel industry, Biden’s plan at least recognizes that throughout the adversity experienced in this transition, the potential for opportunity exists.

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