SAN DIEGO (PRWEB) December 01, 2020
Change is always difficult to accept. Whether it is a milestone life event, a move to a new home, or an unpredictable presidential election, change can take time to adjust to and cause us to worry about the future ahead. The fast-moving and often polarizing political landscape is a change that many must get accustomed to. Many people feel worried about the uncertainty that accompanies the process of transition, new policies, executive orders, and even changes in government funding that comes with any new presidential administration.
This current presidential election addressed many issues and challenges that Americans are facing. Specifically, within the oil industry, discussions of the economy and whether or not the industry will be threatened by other energy or fuel alternatives was pushed to the forefront of the presidential debates. As the president-elect, the Biden administration may appear distressing to some industry insiders due to stances taken regarding oil and fossil fuels. So what does it mean for you?
The Success of Oil in the U.S.
Recently, the United States has been the top crude oil producer globally, ahead of Saudi Arabia and Russia. The middle and southern states have played a large role in securing the United State’s top position. Texas, North Dakota, New Mexico, Oklahoma, and Colorado are responsible for 69 percent of the total United States crude oil production. Across many more states in the southern and middle United States, communities have found similar economic success due to the oil and gas industry.
The oil industry supports thousands of jobs, increases tax revenue, and revives local economies. Its effects can even be seen in non-producing states such as Minnesota, where the oil and gas industry is vital to stimulating and restoring local economies.
It’s no surprise that a new president and administration raises doubts about job security and industry profit. The administration’s decision making will impact us all on a personal level. One wrong policy or executive order and a thriving industry’s growth can be immediately stunted.
The Economic Benefits of the Oil Industry Vs. Government Programs
According to the United States Department of Energy, oil and natural gas provide approximately 80% of American Energy, create approximately 12.3 million American jobs, and save American consumers about $203 billion annually.
On the other hand, American government programs are often wasteful, bureaucratic, and heavy-handed. Moreover, need-based government programs can sometimes act as a disincentive for consumers to gain meaningful employment and financial freedom. It seems apparent that the oil industry and other private sector opportunities are the most effective tools to alleviate poverty in the US.
The Future of the Oil Industry
Even before the Biden administration, the conversation regarding the oil industry shifted towards worrying projections about the industry’s future. Various pressing issues impact the oil industry and influence the levels of demand around the globe. It is also worth noting that this is not the first time in history that oil demand levels have been questioned. In the 1970s the prevailing wisdom of the time suggested that long term oil production had peaked at about 70 million barrels of oil per day. The world currently produces around 96 million barrels per day.
The COVID-19 pandemic and climate change have accelerated the oil industry’s concerns, sometimes seeming to affirm critics who say the end of oil is near. The pandemic has resulted in an economic downfall where no industry has been left unscathed by lockdowns and layoffs. Between March and August 2020, over 107,000 jobs in the oil industry were lost and may not be recovered. The recent urgency in addressing climate change has also pointed the finger at the oil industry. However, it should be noted that the climate has and always will be changing and that the human impact to the climate in particular is very complex science that is not 100% affirmed as fact regardless of what you may read on your favorite blog. Humans are carbon based lifeforms that require the inhaling of Oxygen and exhaling of Carbon Dioxide (CO2) to live. Carbon Dioxide is also plant food. Therefore, it would be prudent for folks on both sides of this discussion to acknowledge this basic fact and not demonize CO2.
Biden’s presidential campaign addressed the urgency of tackling climate change by mentioning “a transition away from the oil industry.” There is no set timeline of how this transition will exactly occur, but it has the potential to impact jobs in areas where the oil industry is central to the economy. It should also be noted that oil and natural gas are essential to deliver power and other goods to people all over the world and there is no 100% substitute for oil and gas. There are also approximately 2 billion people in the world without access to power and attempting to transition away from oil and gas will only increase this number and cause hundreds of millions of people to endure a decrease in their quality of life. Therefore, campaign talking points may not be the best indicator for what this possible transition will look like.
There is no straightforward answer or crystal ball to determine how a new administration will affect the oil and gas industry. It is possible that a Biden administration could pose more risks to the industry as he aims to reduce greenhouse gas emissions. On the other hand, his plan also aims to focus on technologies that can capture oil pollution. If such investments and technologies are made, the oil industry could be headed in a positive direction.
What A Biden Administration Could Mean for the Future of Mineral Rights in the US
Considering the new president-elect’s position and the consequences of the pandemic and climate change, the oil industry must find adaptive solutions to prosper. Oil royalty owners must turn to new markets and grow their wealth with mineral rights and other investments instead of government programs.
The mineral market and mineral valuation rely on the prices of oil. While there is plenty of uncertainty regarding the oil industry, it still is not definitive how the government will impact mineral rights.
Mineral rights are essential in locating and retrieving oil. They are also playing a vital role in advancing clean energy technology. If Biden aims to transition away from oil and towards cleaner energy, minerals will be needed. Mineral owners can find profit and new opportunities with this possible shift.
The Role of Oil in US History
The oil and natural gas industries have been essential in making America one of the world’s most prosperous countries. It has created and sustained countless careers. Many products, technologies, and economic growth would not be possible without the industry that powers it. It cannot be said with certainty that the oil and natural gas industry is headed into another renaissance booming with growth. But it also cannot be said that the industry is headed for failure since oil and natural gas are still being used heavily in nearly every product manufactured today.
Changes in the oil industry will not come abruptly on January 21st, 2021. Biden’s presidency will also exist with a possibly Republican-controlled Senate. This could mean that any significant effort against the oil industry would most likely not pass.
How Oil Companies are Hedging Against the Risk of New Regulation
Investors should realize that oil companies are not unaware of the risks associated with new government regulations. Most oil companies have taken active steps to hedge against that risk by diversifying their portfolio of investments. A big part of this process has been the steps that Shell and many other oil companies have taken to make large investments in renewable energy and technology.
These investments have significant ramifications. Namely, if new regulations that favor renewable energy technologies are enacted, oil companies can still prosper. Due to the large investments oil companies have made in the renewable energy sector, they could be some of its largest stakeholders should the industry grow. Whether new legislation is enacted or not, the bottom line is that due to its diversification into many sectors, the oil industry will continue growing, and mineral rights owners will find ways to profit.
Although there are many uncertainties and worries about if the oil industry will succeed, the Biden administration will need to recognize the vast potential and promise that can be unlocked from the oil and natural gas industry. The industry has many possible areas where it can continue to expand and develop. Despite what some critics may say, oil seems destined for a bright future and plenty of room for new opportunities.