The Republican National Convention is underway and the Democrats will host their version next week.
While countless articles have been written about the differences between the two candidates, the Republican and Democratic Parties just released their official platforms, which details their dream agenda if they were to gain control of the White House and Congress. It should come as no surprise that they are far apart on energy issues.
The Republican platform offers standard industry-friendly fare, calling for deregulation and promising no action on climate change. It rejects the Paris climate change agreement, rejects a carbon price, and pledges to defund renewable energy programs. The platform also downplays the significance of climate change as a national security threat (even though the Pentagon would disagree).
At its core, the platform simply calls for more fossil fuel development. The party supports “opening of public lands and the outer continental shelf to exploration and responsible production, even if these resources will not be immediately developed.” It criticizes Democrats for wanting to “keep it in the ground,” a popular rallying cry among the environmental movement. And in another nod to the industry, Republicans want to leave regulation of fracking, methane emissions, and horizontal drilling to states and not the federal government. Finally it calls for fully liberalizing energy trade, allowing for greater oil and gas exports.
In short, oil and gas companies will probably be pretty pleased with President Trump – although there is quite a bit of uncertainty regarding whether or not he is in line with his party’s articles of faith. Drillers would likely see fewer regulatory roadblocks and weaker support for competing technologies. Related: Why Lithium Will See Another Price Spike This Fall
The Democratic platform is much more complicated for the industry.
Democrats call for an 80 percent reduction of greenhouse gas emissions by 2050 and lambast Republicans for denying climate change science. They support a Department of Justice inquiry into the role that oil companies played in misleading the public on climate change, a statement that all but mentions ExxonMobil. They also want to end fossil fuel subsidies and tax breaks while expanding public support for renewable energy and mass transit.
Unlike the Republicans, the Democrats do not clearly support an expansion of oil and gas production. They oppose drilling in the Arctic and Atlantic Oceans, and support a “phase down” of fossil fuel development on public lands.
But what should frighten oil and gas producers the most is the Democrats’ vision for the future. For example, one statement says “America must be running entirely on clean energy by mid-century.” On the way to that future the Democrats issued an interim goal of 50 percent clean electricity within a decade. There are massive questions marks around the Democrats ability and willingness to pursue such a strategy, but it presents an existential threat to both the production of oil and gas, and the long-term demand for those resources.
Still while the platform sounds like a nightmare for the oil and gas industry, there are some questions that remain. The surprisingly successful campaign of Senator Bernie Sanders, and his reluctance to quickly exit the race, has added new threats for the industry as the Democratic platform took a slight turn to the left. The opposition to Arctic drilling, for instance, is widely thought to come because of pressure put on by Sanders and the Left. As Secretary of State, Hillary Clinton once supported Arctic drilling. The same can be said of her newfound opposition to the Keystone XL pipeline.
But the influence of Sanders fell short on one overarching issue. The lieutenants of Secretary Clinton that helped form the platform resisted a call put forward by Sanders and his supporters for an outright nationwide ban on fracking. Related: Energy Is The Reason Europe Is Still Backing Erdogan
In fact, Hillary Clinton has not been an enemy of oil and gas drilling per se. As Secretary of State, Hillary Clinton tried to help spread fracking techniques and technology to other countries, most notably in China and Eastern Europe. Her opposition to a fracking ban suggests she would not put dramatic hurdles in the industry’s way in the short run. While she won’t be as friendly as her Republican opponent, she won’t slam on the breaks for drilling either.
The most likely outcome if she were to become President would be an extension of the Obama administration, which is to say, some regulatory hurdles on drilling plus some public support for alternatives to oil and gas. President Obama may not be a fan favorite in the oil industry, but he didn’t put a halt to the shale drilling boom, which came under his watch.
Under the Obama administration, the U.S. has made significant strides in the electric power sector, with renewable energy scaling up at the expense of coal and nuclear power. The transportation sector has also made progress on efficiency. But the Obama-Clinton approach to energy it is a far cry from the revolutionary ideas of Senator Sanders. In other words, oil companies will much prefer President Trump, but they can probably live with President Clinton.
That is not to suggest that the fossil fuel industry doesn’t face long-term questions over its survival, but a wholesale move off of fossil fuels won’t happen overnight under President Clinton.
By Nick Cunningham of Oilprice.com
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