How Will Joe Biden Change the Shale Industry?
Jan 27 2021 Read 1843 Times
With Joe Biden now sworn into the Oval Office, there’s growing chatter surrounding how the new president will change the shale industry. During his campaign Biden pledged to phase out fracking in the United States by reducing incentives and introducing new legislations, a commitment that divided many American voters. The President was clear about his intentions to prioritise climate change and slash emissions, which naturally corresponds with a transition away from fossil fuels and shale oil. While Biden stopped short of a total ban, he was clear about the environmental intentions of his administration.
“We’re not getting rid of fossil fuels. We’re getting rid of the subsidies for fossil fuels, but we’re not getting rid of fossil fuels for a long time,” said Biden on the campaign trail.
Biden promises an “aggressive” approach
A return to the Paris climate agreement will have a major impact on fracking in the United States, with Biden committing to “aggressive emission reductions” by 2035. Under the Biden administration fracking companies can expect a significant drop in incentives and a rollback of tax benefits, which will translate to higher production costs for shale drillers. According to Goldman Sachs, this could add up to US$6 a barrel to the total cost of production. This could be a final blow for many producers that have been hit hard by the drop in demand triggered by the coronavirus pandemic.
Analysts also expect a reduction in the availability of reserves as Biden makes it more difficult to gain fracking licenses on federal land. Currently around 22% of oil production takes place on federal land. If the Biden administration cuts back licenses, analysts at S&P Global Platts predict it could wipe around 2 million barrels a day of the country’s total oil and gas production tally.
Accelerating clean energy in the USA
As well as limiting reserves and decreasing incentives, the Biden administration will place a heavy focus on the construction of a clean electricity network. The intention is to lower demand for fossil fuels and support a gradual transition to green energy. Electric vehicle ownership incentives and a renewed focus on the construction of EV charging stations will also help to lower demand for fossil fuels.
While all eyes were on the United States during the presidential election, combating climate change will be a global effort. Find out more about how countries around the world are working together to finetune auto lubricant benchmarks in ‘Global Collaboration and Development of the Latest Engine Oil Standards.’
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