Nail-biting US election to decide fate of energy dominance

AT THIS stage many pollsters have been too scared to call the election, warning that incumbent president Donald Trump may yet again defy expectations tomorrow and take the White House for a second term with swing states still too early to make definitive presumptions.
Nail-biting US election to decide fate of energy dominance Nail-biting US election to decide fate of energy dominance Nail-biting US election to decide fate of energy dominance Nail-biting US election to decide fate of energy dominance Nail-biting US election to decide fate of energy dominance

Democrat nominee Joe Biden looks set to take the White House tomorrow. Election results should start rolling in from midday eastern time - though the outcome of the election could take more than a week to definitively know due to the level of postal voting.

Paul Hunt

Senior Journalist: Energy & Commodities

Paul Hunt


One of the key issues for the next administration will be policy and leadership around future energy opportunities and energy dominance, all in the context of global warming and stressed relationships with major customers like China. 

Results will start rolling in mid-morning for those on the east coast in Australia. Again, like the 2016 election, the Republicans are hoping to snare the 270 electoral college votes and retain the White House. 

Energy policy featured front and centre alongside the global economic turmoil wrought by the COVID-19 pandemic, health responses to the pandemic, Black Lives Matter issues, and Supreme Court appointments. 

Fraccing has turned into a major last-minute election issue in one of the key swing states, Pennsylvania.

A national survey from the Pew Research Centre found energy policy and climate change were in the top 10 issues that voters felt were ‘very important.' In swing states, the issue of energy policy is even more important. Pennsylvania, according to FiveThirtyEight pollster Nate Silver, will be the key swing state of all six. 

Both Trump and Joe Biden have spent the last few days in gas-rich Pennsylvania in a last-ditch attempt to win over voters and score the 20 electoral college votes the state holds.

Trump previously won the 20 votes by just a 0.7% majority. The Keystone State is generally considered a battleground state and had previously been held by the Democrats.

A key issue for Pennsylvania is fraccing policy. Biden misstepped earlier in the election campaign by promising to ban the practice, a promise he later walked back from, only to then say in the latest presidential debate he believed in a "transition from oil." 

In the final minutes of the presidential debate between Trump and Biden, the Democrat candidate said he would "transition from the oil industry… because the oil industry pollutes significantly." 

Trump has subsequently jumped on the issue and is claiming every chance he gets that Biden aims to end the oil and gas industry in the state. The Biden campaign issued a statement saying the official position of the presidential hopeful was to ban fraccing on federal lands, not state lands.

Pop star Lady Gaga was attacked for joining Biden in Pennsylvania this week. In a tweet Trump accused her of being an "anti-fracking activist" because she shared a link to a website called Artists Against Fracking in 2012.

Australian Securities Exchange-listed oilers including 88 Energy, Australis Energy, Byron Energy, BHP, Empire Energy, XCD Energy, Otto Energy, Oil Search, Eon NRG, Stonehorse Energy, Brookside Energy, and Winchester Energy, among others, all hold interests in the US. Some in state jurisdictions and others in federal regions.

It is important to note that BHP's acreage is not onshore but offshore in federal waters. 

US shale operators would be the biggest hit by a ban on fraccing, and it comes at a time when industry is on its knees after the oil price nosedived earlier this year due to coronavirus concerns and a disagreement between OPEC+ members which ended up flooding global markets. 

Research commissioned by the American Petroleum Institute, modelled by OnLocation, was released at the start of the election campaign and revealed that a federal ban on fraccing on public and private lands would cost the US economy over US$7.1 trillion by 2030 - on a worst-case scenario.

More than 7.5 million jobs would disappear in 2022 alone and increased household energy costs by more than $600 a year, according to the research. The state to be hardest hit would be Pennsylvania. 

Biden has also promised under his administration to end subsidies for the oil and gas sector. 

"No more subsidies for the fossil fuel industry, no more drilling on federal lands, no more drilling including offshore, no ability for the oil industry to continue to drill," Biden said back in September of last year. 

"Period. Ends."

A point of interest is that while Biden plans to introduce methane emissions limitations and limit fraccing on federal lands, the proposed US$2 trillion commitment to clean energy initiatives could provide a big stimulus to the oil and gas sector looking to decarbonise.

In contrast president Trump has promised to grow the oil and gas industry and "protect jobs and help out-of-work Americans" by ensuring US fossil fuel dominance. How he will do this has been comprehensively set out. 

On Monday, Washington time, the president said he had signed an executive order to delay the next administration from banning fraccing on federal lands. 

"Just signed an order to protect fracking and the oil and gas industry. This means JOBS, low energy bills, and continued AMERICAN ENERGY INDEPENDENCE! Sleepy Joe would BAN fracking and destroy American energy jobs! He has NO clue!!," Trump tweeted on Monday. 

The US finally achieved energy independence under the Trump administration, according to IHS Markit vice chair Daniel Yergin, speaking to CNBC overnight. 

He noted that every president since Nixxon had called for energy independence and under Trump "we finally achieved it." Largely this was due to the Obama administration's efforts, which Yergin noted had encouraged investment while Trump was in power. 

US oil production peaked at 13.1 million barrels a day early this year before the oil price crash and COVID-19 outbreak. Energy Information Administration data shows the US is currently producing at around 10.6MMbopd. This compares to about 5MMbopd in 2008.

The Trump administration has bullishly moved to increase the country's LNG exports and domestic production since.

In May last year the US energy department attempted to "rebrand" oil and gas as "molecules of freedom."

Fraccing has been an issue for the Democrats for a number of years. In 2018 a move by state Democrats in Colorado called Proposition 112 - aimed at allowing property owners compensation if their land was devalued due to oil and gas operations - failed in a general election.