A Joe Biden win at next month’s U.S. elections will likely be an upward catalyst for oil prices because it will increase costs for the shale patch and will likely result in a weaker U.S. dollar, according to Goldman Sachs.
“We do not expect the upcoming U.S. elections to derail our bullish forecasts for oil and gas prices, with a Blue Wave likely to be in fact a positive catalyst,” the investment bank said a research note on Sunday, as carried by CNBC.
“Headwinds to U.S. oil and gas production would rise further under a Joe Biden administration, even if the candidate has struck a centrist tone,” Goldman’s commodity analysts say.
Biden has said he would ban new oil and gas leases on federal land and has a clean energy plan to boost the role of renewable energy in power generation and job creation.
Goldman Sachs expects a Biden Administration will tighten regulation, taxes, methane restrictions, and new drilling for the oil industry, which, as a whole, will raise the cost of U.S. shale production, leading to “shale supply headwinds.”
The regulations and taxes could raise production costs at the U.S. shale patch by as much as $5 a barrel, according to Goldman’s analysts.
In case U.S. President Donald Trump is re-elected in November, the impact of the re-election “would likely remain modest at best” because of the investor focus to shift away from fossil fuels, although the current administration’s policies favoring the oil industry will remain, Goldman said.
Last month, Goldman Sachs said it was bullish on oil, expecting the market to be in a deficit of around 3 million barrels per day (bpd) by the fourth quarter and Brent Crude prices to recover to $49 a barrel by the end of this year.
Earlier in September, Goldman Sachs forecast Brent Crude to reach $65 a barrel in the third quarter of 2021, although it could end next year lower, at $58 a barrel.
By Tsvetana Paraskova for Oilprice.com
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Biden win will definitely put on the agenda or the bill passed by Congress for banning oil & gas drilling in Arctic & Atlantic Ocean waters for clean water providence,
banning oil & gas drilling in wild life areas to protect wild lives, also gulf of Mexico waters.
So, it will be seen that post Biden win, US oil & gas production activity will take a back seat from close to 10 mn bpd of today's oil production to say 7-8 mn bpd.
While a Biden win is likely to favour the renewables and clean energy sectors and would be expected to tighten regulation, taxes, methane restrictions, and new drilling for the oil industry, their impact on the US shale oil industry would be marginal. One reason is that President Biden has no intention of alienating the influential shale industry therefore he will dilute his measures once elected. The other reason that if US oil production (overwhelmingly shale oil) declines further, it will mean increasing crude oil imports by the United States and this will widen US budget deficit.
A Trump re-election will re-ignite the trade war with China and this could be bad for the global economy and bearish for oil.
And although the polls suggest a Biden win, I have the feeling that Trump may prevail because his supporters are fanatical about him.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Then again they may assume Joe will probably forget what policies he took to the election and live will be unchanged.
Given the Clinton Foundation and Pelosi are pushing for those on welfare to be forced to have digital currency bank accounts I suppose this group of consumers will no longer have cars and demand will fall which will cap petrol prices at the bowser.