While Democratic presidential candidate Joe Biden vows to push for policies that will bar new oil drilling projects, Trump resumed with his oil leasing projects.
Biden’s stance against increased oil production is in line with his plan to rejoin the global movement in addressing climate change; but, at the cost of losing support from the proponents of the oil industry. Trump on the other hand, wants to pursue ambitions of making America great again by dominating the global oil industry. After all, the incumbent U.S. president does not believe in the climate change phenomenon and has scorned scientists by calling their calls for global action as hoaxes.
Although Trump may be keeping the support of the gas and oil company, it’s quite apparent that he still does not understand the current challenges faced by the industry. The problem is not the supply but the reduced demand for crude products.
How Soon Can the Oil Industry Recover from the Collapse Caused by the Pandemic?
The reality is that the oil industry is hurting from the effects of the pandemic, when the worldwide disruptions in economic activities resulted in overflow of supply that was not met by demand. As a result, demand took a tumble, sending oil prices crashing down to even as low as $0 per barrel at the height of the coronavirus lockdown orders.
Although the price of oil has somehow recovered at a price of $40 per barrel, it still has not reached the industry domestic benchmark of $50 to $60 per barrel.
According to Enverus’ VP for Market Intelligence, Bernadette Johnson, their projection is that the crude oil market will be able to bounce bank to pre-pandemic levels by 2023, and only when the West Texas Intermediate crude oil reaches the domestic standard price per barrel.
The Oil Industry Already Negatively Affected While Yet to Face the Challenges Posed by Carbon Reduction Initiatives
What the pandemic has done was to handicap oil companies once they face the challenges posed by global initiatives for carbon reduction. While the industry estimates that it will take about at least three years to recover from the losses caused by the oversupply, countries supporting the climate change actions are also fast tracking on projects that will see to the reduction of demand for carbon-based fuel.
Regardless of what Joe Biden plans to put forward as policies in stopping oil production in the U.S., the effect if any, will likely be minimal. As it is, the country’s oil producers, particularly in New Mexico, a;ready have more than enough oil supply and acreage, to see them through during Biden’s potential 4-year tenure as new U.S. president.