The United Arab Emirates say they no longer fear U.S. shale as the Joe Biden Administration begins. Why should they?
The incoming President has already signaled that on his first day in office he will sign executive orders to revoke the permit for Canada to build the Keystone XL pipeline and rejoin the Paris Climate Accord. That will no doubt lead to more layoffs in the beaten-down energy sector. Already the U.S. petroleum industry is going into full retreat from energy independence. The industry that has helped keep inflation in check with low energy prices will now be forced into contraction as it will be under assault.
Layoffs are already being planned. TC Energy said the Keystone XL was going to sustain more than 11,000 jobs in 2021 so we can start the Biden administration with a net negative 11,000 jobs job is lost. Not bad for your first day.
Adding fuel to the fire, the International Labor Organization (ILO) says that globally over 6 million jobs will be lost in the energy sector as we rejoin the Paris climate accord. Biden’s $2 trillion clean energy infrastructure plan, with its goal of reaching net-zero emissions by 2050, is on the table. If and when that passes the House and Senate it will “create millions of good-paying jobs that provide workers with the choice to join a union and bargain collectively with their employers.” I wonder if the Union workers on the Keystone XL can bargain to get their jobs back?
Biden’s disdain for fracking has been transparent and will assuredly put more regulations on the industry and make it harder to build much-needed infrastructure which will inevitably lead us to much higher energy prices. Not only do you have former Secretary of State John Kerry as climate czar you also have long timer environmental regulator Michael Regan leading the Environmental Protection Agency.
But will he listen to the US energy industry?
John Podesta, an adviser to former President Barack Obama who helped craft the 2015 Paris Agreement according to Reuters said “We got off track very severely for the last four years with a climate denier in the Oval Office. We enter the international arena with a credibility deficit.” Of course no word about the credibility deficit of our Paris accord partners that all failed to reach their target while the U.S. did. In fact that the U.S. was the only country in the accord that met its target because we were able to replace coal with cheap fracked natural gas.
These decisions from the Biden Administration are already being celebrated by members of the OPEC cartel that sees it as a nail in the coffin over the upstart U.S. shale industry. The UAE energy minister Suhail al-Mazrouei said yesterday that “Looking at what shale has been through, I’m not sure growth at any cost will be an option,” he said. “I think there is wisdom now on the right pace of growth. I think it will be wise growth driven by investor expectations.” He alludes to the fact that investors in shale have been burned and will have a tough time raising capital. This comes as Saudi Arabia recently announced plans to cut oil production by 1 million barrels a day in an attempt to drive up global oil prices. They feel freer to do that as they have less fear that shale can rise and make up the difference.