The election of President Joe Biden has been the cause of much hand-wringing in the United States oil and gas sector. The current U.S. president has made clean energy and climate change a central part of his platform, at what many fear will be the expense of shale, one of the nation’s key economic sectors. “Unfortunately, our economic bedrock of oil and gas is under attack by an administration that is bent on eliminating millions of jobs,” Republican Congressman Brian Babin told the public back in February at a press event along with six other Texan lawmakers, as he stood in front of the refineries and petrochemical plants of the Houston Ship Channel.
This rather alarmist missive came on the heels of the then very new president’s decision to pull the plug on the massive Keystone XL pipeline project on his very first day in office. Babin’s sentiments have been echoed by plenty of oilfield insiders and pro-oil pundits who have not been shy about decrying the new administration’s less than cozy relationship with the shale sector.
That sentiment is understandable, with Biden’s Energy Secretary pick Jennifer Granholm issuing an ultimatum to the oil industry to adapt or die. Granholm emphasized that the world is moving away from oil and toward clean energy. “I’m not going to sugarcoat how hard transitions are,” Granholm said at IHS Markit’s annual CERAWeek conference last month, acknowledging that the clean energy transition will be anything but easy for the United States shale patch. “The bottom line is this particular growth of clean energy and reduction of carbon provides a huge opportunity and I’m extending a hand of partnership,” she said.
Despite this rhetoric, it seems that the Biden administration is now throwing the oil industry a bone. The president’s much-touted infrastructure initiative is going to call for asphalt - lots and lots of asphalt - in an unexpected boon for the domestic oil sector. Last week Biden presented his $2.25 trillion infrastructure proposal that will provide a number of economic opportunities for oil, including $115 billion allocated to roads and bridges, and an additional $16 billion to get out of work oilfield laborers back into paid positions plugging abandoned wells across the United States.
The biggest opportunity, however, lies in the sky-high asphalt demand embedded in the infrastructure spending bill. The biggest winners may not be in the domestic market though. Since asphalt is derived from “the heaviest and most-dense material in a barrel of crude” this development could stand to benefit Canada’s struggling oil sands the most, which will be ecstatic for any new market for their heavy crude bitumen.
In fact, while the Biden administration is charging full steam ahead on the clean energy transition, with massive investments into electric vehicles and renewables, it’s clear that they have been listening to the oil sector and have been making a concerted effort not to leave oilfield workers behind. “Since taking office two months ago, Biden’s been more boon than bane for a fossil-fuel industry that was wary of the ascendance of a politician bent on accelerating the energy transition,” Bloomberg reported last week, citing Goldman Sachs’ assertion that Biden has been bullish for oil overall.
The jobs can’t come fast enough. “Home to the world’s third-biggest oil workforce, the U.S. saw an 11% cut to headcount in 2020 that reduced the ranks of employed to just under 1 million,” Bloomberg reports. “Another 10,000 or so job cuts are expected this year.” While the Biden administration has been straightforward that there will be oilfield industry casualties from the green energy transition, so far it does seem that they’re doing what they can to soften the blow. It appears that even the infrastructure investments into renewable energy will benefit oilfield workers in the end - and ultimately large oil states like Texas will play a major role in the future of wind, solar, and energy storage in the U.S.
By Haley Zaremba for Oilprice.com
